By Shelly Melancon (Switzerland)
The past 24 hours have seen the value of Terra’s native token, LUNA, jump by more than 9% in unprecedented positive price action.
The new development has placed Terra above most of the top-performing cryptos in the market as its price continues to soar, moving it close to the top of the chart in terms of improved market capitalization.
Most of the major spot exchange platforms host the Terra governance token, which is currently trading at $88.
Terra takes the Lead as Others Follow
Another of the top-performing digital tokens currently in the green zone is the largest cryptocurrency, Bitcoin. The BTC has been in a positive run as it reclaimed the $40,000 price level despite having a mere increase of 0.83% during the same period.
However, Bitcoin has slipped further below the $39,000 price mark, indicating that the flagship digital token has slumped to its lowest price level in more than one month.
Other altcoins appear to be declining down to the red zone, with Ethereum at a static position after recording some significant losses. Cardano has slumped below LUNA for another time as its value dropped above 2%.
For its part, Solana occupies the seventh place after some not-so-good performances. Despite the setback, it still maintained its position, considering how it has underperformed in contrast to other cryptocurrencies.
Also read:Terra Making Headways
According to the report by U.Today, the Terra UST is the most sought-after algorithmic stablecoin within the Terra space. The UST has overtaken the BUSD in terms of market capitalization. It is now the third-biggest stablecoin, trailing behind Tether USDT in first and USD Coin in second place, respectively.
The beginning of 2022 has been a challenging period for LUNA. Its breakthrough came in February, as it experienced a massive turnover rate after the creation of the Bitcoin-based stablecoin reserve by its parent company, the Luna Foundation Guard (LFG).
The total reserve balance of the LFG is currently $2.41 billion, with Bitcoin making up the bulk of the reserve at 69.3%.
Stablecoins have become one of the most widely used tokens for transactional purposes due to their pegged value linked to fiat currencies. They are called “stable” because their value is attached to a fiat currency, particularly the USD, which shields them from market volatility.
Meanwhile, the Terra UST, unlike others, is not pegged to a fiat currency. It is an algorithmic stablecoin hosted on a smart contract. The huge reserve is developed to provide enough stability needed to maintain its value at a steady $1.
As a result, users can burn the LUNA token to reduce the amount of the coin in supply, which in turn stabilizes the price of the UST. The burning of the tokens has an incentive attached to it.
At the moment, no other stablecoin has the potential of the UST due to the system put in place to ensure that consistent price fluctuations in fiat cannot affect the value of its coin.
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