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Monday, December 5, 2022
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    HomeMarketTerra continues to capture DeFi market share, Luna token rockets

    Terra continues to capture DeFi market share, Luna token rockets

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    Luna has been on a tear just lately, capturing up a staggering 50% within the final week. At $34 billion, it’s presently the seventh largest cryptocurrency by market cap. Much more headline-worthy is that it has now flipped Solana ($32 billion) and Cardano ($31 billion), who occupy the eighth and ninth spots respectively.

    Through CoinMarketCap

    Luna Token

    Luna, after all, is the token that fuels the DeFi ecosystem of Terra Labs. The actual product is a gaggle of stablecoins, the most important of which is the dollar-pegged UST. To boil the token’s utility down in easy phrases, Luna’s worth will go so far as UST goes.

    As UST good points adoption, Luna rises, and vice-versa. If UST market cap rises, Luna provide is burned and therefore the Luna worth goes up (and vice-versa). That is as a result of distinctive algorithmic mechanism by which the Terra stablecoins retain their fiat pegs (market brokers are incentivised to do that by way of arbitrage).

    Proper now, the UST stablecoin is sitting fairly with a market cap of $13 billion (fifteenth largest crypto) – the fourth largest stablecoin however the one one providing the tantalising high quality of decentralisation. This decentralisation is the distinctive promoting level of UST, after all. The three heavy hitters forward of UST are all centralised, which could be very a lot a unclean phrase in crypto. The largest is the much-maligned Tether ($79 billion, third largest crypto), Circle’s USDC is subsequent ($53 billion, fifth largest) and Binance USD is third ($18 billion, twelfth largest).

    So with Luna’s meteoric rise over the past 12 months in thoughts, it follows that we are able to anticipate to see related development within the stablecoin – which the graph under from CoinMarketCap particulars, a formidable rise from simply $2.8 billion this time final 12 months to in the present day’s $13 billion for the market cap of UST.

    UST market cap by way of CoinMarketCap

    Complete Worth Locked

    One other method of monitoring the mushrooming UST market cap is to look at the overall worth locked (TVL) within the Terra ecosystem. Very like each different datapoint associated to Luna, it makes for spectacular studying. A chunky 11.2% of the $290 billion TVL in all the DeFi house is now locked up in Terra, in accordance with DefiLlama. Galloping previous Solana, Avalanche, Fantom and BSC, Terra now comfortably sits in second, with its $23.5 billion in TVL effectively away from BSC in third at $12.4 billion. Ethereum, after all, nonetheless guidelines the roost with its $117 billion representing a 55% share of TVL.

    TVL on Luna (purple on graph) has been rising steadily, now representing 11.2% of whole DeFi TVL

    Contra-Market

    But it surely’s not simply the gross good points that stand out. An intriguing quirk of Luna over the past 12 months or so has been it’s propensity to maneuver countercyclically. It’s presently solely 10% off all time highs (Bitcoin is 36% off all time highs whereas most alt cash are considerably worse off) – a logo of the way it has been resilient via a fallow interval for crypto over the previous couple of months. Certainly, at a correlation of 0.34 with Bitcoin over the past 9 months, it’s remarkably low by crypto requirements. The rationale for that is that in durations the place crypto has fallen, traders have shed crypto publicity and as an alternative purchased up the stablecoin UST, therefore pumping the Luna worth.

    So to wrap this up, Luna now boasts the next:

    • Second largest TVL within the DeFi house
    • Largest decentralised stablecoin (UST)
    • Solely 10% off all time highs
    • Extraordinarily low correlation to the broader market by crypto requirements

    With these spectacular attributes and a market cap of $34 billion, Luna is now not an alt coin. It’s within the bigtime.

     



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