Terra is the second-biggest DeFi player in the crypto market, but it may be overvalued

Terra is the second-biggest DeFi player in the crypto market, but it may be overvalued
Terra price may be set to come down after the cryptocurrency hit an all-time-high and is the second-biggest DeFi player in the marketBI India
  • Terra is now the second-biggest decentralised finance (DeFi) player in the crypto market, after Ethereum.
  • However, its total value locked (TVL) ratio shows that the cryptocurrency may be overvalued as its current price of $82.04.
  • Terra’s LUNA token hit an all-time-high of $83.81, earlier today.
Terra, whose LUNA token has been bucking the doldrums of the crypto market to barge its way into the top 10 most valuable cryptocurrency by value, is now the second-biggest smart contract platform after Ethereum.

Moreover, Terra’s LUNA token’s price hit all-time-high of $83.81 earlier today as it continues to surge. Compared to last year, LUNA’s price is 12,000% percent higher. This means if you had invested ₹10,000 in the token on January 1, it would be worth ₹12,00,000 today.

Top five smart contract platforms by total value locked (TVL):
PlatformSeven-day changeTotal value locked
Ethereum (ETH)5.88%$153.18 billion
Terra (LUNA)55%$18.06 billion
BSC (BNB)3.87%$16.61 billion
Avalanche16.37%$12.33 billion
Solana6.85%$11.7 billion
Source: DeFi Llama

Is Terra headed for a dip?

According to data cited by DeFi Llama, the total value locked (TVL) in Terra has surged by 55% in the last seven days, overtaking Binance Smart Chain (BNB). TVL is an indicator of how many assets are currently being staked on a specific platform. Simply put, it’s the overall underlying supply.


However, at a price of $82.04 and market capitalisation of $30.48 billion, according to CoinMarketCap, the TVL ratio of Terra comes up to 1.68. This indicates that the recent bull run has left the cryptocurrency overvalued. According to FXStreet, investors will now be looking to book profits, which is likely to push LUNA to lower, but more stable, levels.

Total Value Locked (TVL)Market capitalisationTVL Ratio (TVL/M Cap)
$18.06 billion$30.48 billion1.68
Source: Data as of 3:00pm Indian Standard Time (IST) | TVL figure from DeFi Llama, Market capitalisation from CoinMarketCap | Calculation done by Business Insider India

As of 3:00pm Indian Standard Time (IST), Terra’s price has jumped by nearly 9% in the last 24 hours with a 44% increase over the last seven days. During the last week, it broke into the top 10 most valued cryptocurrencies in the global market alongside Avalanche’s re-entry.

And, a lot of the credit goes to the hype behind DeFi. Terra UST (UST) is one of the stablecoins — others include the Euro (EUT), the Canadian Dollar (CAT), and the Japanese Yen (JPY) — that’s based on the Terra blockchain. It is now the most valuable decentralised stablecoin in the world after overtaking DAI.

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