Terra's LUNA token continues to hold its own even in a crypto bear market — here's why
- Terra’s LUNA token is up by more than 3% since yesterday, while other cryptocurrencies continue to struggle
- The surge comes on the back of
Binancecompleting LUNA’s integration into the exchange and activating deposits for the altcoin. LUNA Foundation Guardalso announced its formation with the aim of supporting new projects that use Terra’s stablecoins.
- Moreover Terra is stepping into the
metaversewith Robohero, a play-to-earn game that uses the LUNA cryptocurrency.
AdvertisementTerra’s LUNA cryptocurrency is the only major player in the space to gain above 3% in the last 24 hours. The token is one of very few to make price gains over the past week, even amidst a bear market.
While the cryptocurrency wasn’t spared from the initial crypto crash, which saw its price plummet from an all-time-high of ₹7,693 in December — it has been climbing back up since and is currently trading at ₹6,134.
Reasons for why LUNA has been able to hold its own range from the formation of the Luna Foundation Guard (LFG) to the launch of RoboHero, a
Ever since it broke into the top ten cryptocurrencies in terms of market capitalisation last year, LUNA has more than doubled its price over the course of a year.
Showing no signs of a slowdown yet, LUNA is seen to have the wind on its sail lately, with at least three positive influences.
LUNA Foundation Guard (LFG) established
Intended to grow the Terra ecosystem and help stabilise it, the LFG is a non-profit organisation. LFG has been gifted 50 million LUNA tokens by Terraform Labs, the company that operates the LUNA token.
In a press release, the LFG is stated to have two major goals – funding decentralised finance (DeFi) projects that utilise Terra’s stablecoins, and building a reserve to maintain Terra’s dollar-pegged stablecoin.
Olympus DAO, Rari Fuse, Convex Finance and Tokemak are some of the crypto projects to whom Terra was discussing fund allocation.
RoboHero: Metaverse game for smartphones that uses LUNA
RoboHero is a game in development, which made a splash since releasing a video trailer last week. It is a metaverse game that lets players battle each other using ‘BioRobots’, while trading using ROBO tokens in-game. The developers have said it will be a play-to-earn (P2E) game, meaning rewards can be accumulated and traded for real-world cash.
It will also feature NFTs, billboard ads, and give the player money just for watching ads (Watch 2 Earn). When completed, players can play RoboHero on their smartphone, and buy ROBO tokens using LUNA cryptocurrency.
Terra UST stablecoin rises three-fold
AdvertisementThe UST is a major, but just one of the stablecoins maintained by Terra. Between November 2021 and mid-January 2022, the circulating value of Terra UST rose three-fold, from less than $3 billion to $11.06 billion today. Changes in LUNA supply is seen to have enabled the steep rise in its circulating market capitalisation value.
Such a rise encouraged the founder of Terra to tweet a wish, indicating desire to become dominant among stablecoins.
What is Terra’s LUNA cryptocurrency
Terra, the promoter of the LUNA token says this blockchain intends to create a better digital financial system. LUNA allows smart contracts and building dApps on top of the Terra network, including DeFi protocols such as Anchor and Mirror. Eschewing powerful mining networks, the currency issuance mechanism of Terra helps reduce energy consumption.
Terra uses the day-to-day price stability of fiat currencies, to create ‘stablecoins’ – similar to how Tether uses the US Dollar as a peg to create the USDT cryptocurrency. Thus Terra offers a basket of stablecoin currencies, pegged to the likes of the US Dollar, Euro, IMF SDR, British Pound, Japanese Yen, and South Korean Won. When transaction volumes of these currencies increase, Terra sells the native LUNA to get price stability — liquidity to match the fiat currency in circulation. When transaction volumes decrease, Terra buys back LUNA. This does mean intra-day volatility for the LUNA token, structured intentionally to minimise volatility of Terra’s stablecoins.
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