Terra (LUNA) and TerraUSD (UST) - statistics & facts
Terra (LUNA) made headlines in February 2022 for being one of the few to avoid negative impacts of the war in Ukraine. LUNA’s price by the end of that month was close to 93 U.S. dollars by that time, compared to roughly 50 U.S. dollars right before Russia started its military actions. This figure also meant an all-time high for the cryptocurrency that launched in 2018, turning LUNA into one of the biggest cryptocurrencies in the world. To compare, the Terra coin was now ahead of Solana – a competitor that also reached the news in early 2022 - but was now also bigger than the more widely known Dogecoin and SHIBA INU. There are two key reasons for this: First, the positive price volatility of LUNA stood out in a time when the overall crypto market seemed to struggle. Second, the Terra token has very close ties with two other important cryptocurrencies in 2022: Stablecoin UST and crypto lending token Anchor Protocol.
LUNA is a support act for “main event” UST
Terra (LUNA) and TerraUSD (UST) share much of their DNA together and the two are integral to how each works. UST is a stablecoin, a type of cryptocurrency whose value is connected to the price development of other assets like fiat currencies or commodities. TerraUSD, much like some of the other popular stablecoins like Tether (USDT) is pegged to the U.S. dollar. Unlike Tether, however, Terra's coin maintains its peg not from a reserve of assets but from an algorithm that automatically sacrifices ("burns") LUNA tokens to create new UST coins. Simply put, Terra exists to provide stability for UST. This automated system, so its creators claim, should possibly keep the price of its stablecoin steadier than the price change of most other cryptocurrencies. This is a big deal for Decentralized Finance or DeFi, as some of the most valued segments in DeFi rely on price stability to function.
Terra plays a major role in the popular Anchor Protocol
Another reason that explains Terra’s rise to prominence is the growth of one of the applications built within its blockchain: Anchor Protocol. This decentralized crypto lending platform saw its TVL (total value locked) – or how much money was staked in it - grow by about 50 percent within a month in 2022. The platform stood out for many people due to its promise to hand out a stable interest rate of nearly 20 percent for those looking to invest their cryptocurrencies - a percentage described by some as "a benchmark yield for the whole industry" – turning it into one of the largest DeFi platforms based on market cap.
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Raynor de Best
Content expert covering payments and (crypto)currencies