Terra (LUNA) on Spotlight

by Deepan Datta  |  October 11, 2021

LUNA, the native crypto coin of the Terra blockchain project is one of the top-performing coins in the market. In the last one year period, it has gained over 16,000%, moving up from $0.20 (₹15) to near the $50 (₹3,750) level.

It is currently the 11th largest cryptocurrency by market capitalization and as of 8th Oct 2021, the coin’s total market cap is close to $18 billion. 

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Terra (LUNA) on the Spotlight

To understand what are the factors responsible for LUNA’s steep increase in valuation, first, you need to know about the Terra blockchain project and the utility of the LUNA token.

Terra is a blockchain project developed by a South Korean blockchain startup Terraform Labs in 2018. It builds next-generation decentralized applications and also powers startup’s other cryptocurrencies, including UST stablecoin. 

The UST coin, which is pegged to the U.S. Dollar is very crucial to the growth of the LUNA token as it plays an important role in its supply and valuation. You must now be thinking, how a stablecoin can impact the price of another cryptocurrency? It’s all in the tokenomics of LUNA. Let’s take a look at the coin. 

What is LUNA?

LUNA is a utility token of Terra blockchain that fuels the network and is used as collateral for stablecoins.

To mint every UST coin, a certain percentage of a LUNA token is burned. Therefore, if the demand for UST coins rises, more LUNA tokens will be burned, thus resulting in reduced liquid supply in the market. 

In 2021, year-to-date, 82.14 million LUNA tokens have been burned and the liquid circulating supply is close to 127 million. 

Now, to give you a perspective, Terraform Labs also has an online crypto payment service, Chai, which is one of the fastest-growing payment technology companies in Korea. It allows users to pay in cryptocurrencies including UST for all their daily transactions. This is something that might buzz you about the LUNA’s future growth potential and how much it benefits from the growth of the Terra ecosystem. 

Let’s check what LUNA/USD price charts indicate of its near term price movement. 

Technical Charts: Terra (LUNA) Price Prediction 

source: tradingview.com

An analysis of the daily charts of the LUNA/USDT pair indicates bullish strength in the price momentum. The 20 days EMA is offering nice support, which traders should keep a close eye on.

On the Fibo Retracement indicator, which is used for determining the key support and resistance levels, the $39.22 (₹2,944) and $32.80 (₹2,460) levels are key support levels. Any break below these levels will pull the prices further down. 

For long term investors, buying on dips will be the best strategy for this coin. 

Terra (LUNA) on the News

Columbus-5 Upgrade

The forthcoming LUNA Columbus-5 upgrade will improve LUNA’s capability as a global payment system. One of the significant development after the upgrade will be, Terra will get connected to the fast-growing Solana network, which will enable usage of UST tokens in the Solana ecosystem. UST will become a multi-chain stablecoin, like Tether. 

Funding from VC Investors

Recently, Terra has got a huge boost in the form of investments from multiple VC firms. It has received investment interest from Arrington Capital, Lightspeed Venture Partners, and Pantera Capital. They have pledged an investment of $150 million in the blockchain startup to help incubate various crypto projects linked to the Terra ecosystem.

The other high profile investors in Terra include Binance Labs, Huobi Capital, OKex and Dunamu and Partners. 

Terra has many interesting projects in its pipeline and is largely focused on building financial apps on its own blockchain. An ecosystem to replace the traditional banking system. 

Like, through its Mirror app, users can create synthetic financial assets that are similar to tokenized versions of corporate stocks, etc. 

Yes, Terra is enabling a simpler, more accessible and decentralised financial ecosystem, but now, it would be interesting to see how Terra will expand beyond the boundaries of Korea. And, if able to successfully execute, definitely, LUNA can go to the moon.

Crypto Experts on LUNA

Flood Capital on LUNA:

“UST is currently the 5th largest stable coin with an m-cap over $1.87b and ~$100m daily trading volume; it has done this with only 7 exchange listings. The Luna ecosystem has generated massive demand for UST with no major listings, this indicates clear product-market fit.”

“The Luna ecosystem has just really started with only 2 major applications, yet this has caused the creation of over 1.5b UST in the past 3 months. As Luna continues to attract developers, new protocols and UST demand will explode, we are still early.”

P.S: KuberVerse is an educational initiative. Anything expressed here directly or indirectly is not investment advice. And we ask you to do your own research before investing.


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