3 reasons why the price of Terra (LUNA) has hit a new all-time high

Protocol updates are one of the biggest drivers of momentum as they show the developers’ dedication to correcting bugs, absorbing user requests, and adding new features that make the protocol competitive and add value to the token.

A project where the price of its token has soared to a new all-time high following the release of a long-awaited update Terra (MOON), a blockchain protocol that uses stablecoins tied to fiat, such as TerrUSD (UST) create a global payment system.

Data from Cointelegraph Markets Pro and TradingView show that After LUNA hit a low of $ 23.81 on September 21, the price of LUNA rose 108% to hit a new record on October 4 of $ 49.55.The daily trading volume rose to $ 2.5 billion.

1-day chart of the LUNA / USDT pair. Source: TradingView
3 reasons why the price of Terra (LUNA) has hit a new all-time high
3 reasons why the price of Terra (LUNA) has hit a new all-time high

Three reasons for the LUNA discount: the release of its Columbus 5 update which introduced a LUNA burning mechanism; the adoption of the IBC standard protocol that opens Terra to the Cosmos ecosystem; and an increase in DeFi applications and the overall value contained in the protocol.

Columbus-5 arrives

Columbus-5 was released on September 30th and is the most significant advancement of the protocol to date, according to independent developers and analysts from Terra.

One of the notable changes that came with the upgrade was a modification to the tokenomic model of the project that resulted in all LUNAs used to mint USTs being burned instead of going to the communal pool.

Corresponding data Terra burned $ 832 million at LUNA in the Columbus 5 gene block.

This change has put deflationary pressure on LUNA’s supply and could help increase its long-term price as demand for UST grows.

Blockchain communication standard

A second reason for the dynamism of LUNA’s dynamics was its integration with the Inter-Blockchain Communication (IBC) standard. which enables the Terra network to communicate and interact with protocols in the Cosmos ecosystem.

This integration opens Terra and its UST stablecoin to wider adoption across the Cosmos ecosystem, making it the stablecoin of choice for online applications and chains.

With a larger pool of projects now having access to UST, this could lead to further deflation of LUNA supply, as more must be burned when new USTs are minted.

The total value of the terra ecosystem is increasing

A third reason for LUNA’s upward trend was the growing ecosystem of the network of decentralized financial protocols (DeFi). which helped drive the total recorded in the minutes to a new all-time high.

According to data from Defi Lama, the total value of locked assets on the Terra network reached a record $ 10.07 billion on October 4th the price of LUNA just reached a new high.

Total value locked in Terra. Source: Defi Lama

Currently, Terra’s TVL is over $ 10 billion and the top rated platform in terms of TVL is the Ancor Protocol (ANC) at $ 3.86 billion. ANC is the primary way to mint UST by pledging LUNA or Ether (ETH) as collateral.

Other notable DeFi protocols on the network include Lido (LDO), with a TVL of $ 3 billion, Mirror (MIR) with a TVL of $ 1.38 billion and Terraswap with a TVL of $ 1.32 billion.

Cointelegraph Markets Pro’s VORTECS data began to spot a bullish outlook for LUNA on September 26, ahead of the recent price hike.

The VORTECSâ ?? -Score, exclusive to Cointelegraph, is an algorithmic comparison of historical and current market conditions derived from a combination of data points such as market sentiment, trading volume, recent price movements and activity on Twitter.

VORTECSâ ?? ¢ -Score (green) compared to the LUNA price. Source: Cointelegraph Markets Pro

As can be seen in the graph above, the VORTECS score for LUNA began to rebound on September 21st, peaking at 73, about an hour before the price started rising 108% during trading hours over the next two weeks .

The views and opinions expressed are those of the author only and do not necessarily reflect the views of Cointelegraph. Every investment and trade move involves risk, you will need to do your own research when making a decision.

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