The adoption of TerraUSD (UST) supports LUNA’s rise to a record high

Stablecoins are an indispensable part of the centralized crypto industry and decentralized finance (DeFi) ecosystems that have emerged in the past few years because they provide traders with the liquidity they need to easily convert to different assets.They can also serve as shelters against strong downward fluctuations, such as 25% correction on December 3.

Despite the greater market correction, its price has soared to record highs. One project that includes stablecoin components is Terra (LUNA), a multi-sector blockchain protocol that aims to establish a global payment system through the use of fiat currencies . A pegged stable currency called TerraUSD (UST).

Data from Cointelegraph Markets Pro with Transaction view Since hitting a low of US$37.86 on November 26, the price of LUNA has soared 106%, hitting a record high of US$78.43 on December 5, and its 24-hour trading volume has soared to a record US$5.66 billion.

LUNA/USDT 4-hour chart. Source: TradingView

The three reasons for the LUNA price breakthrough include: the increase in UST supply, a series of new cross-chain integrations in the Terra ecosystem, and the surge in total value lock (TVL) on the Terra network.

UST supply hits a record high

One of the main driving forces behind LUNA’s strength is the rapid growth of UST’s circulating supply. It is now the largest algorithm-backed stablecoin and the fourth-ranked stablecoin on the market, with a market value of 8.221 billion U.S. dollars.

Compared with the more centralized U.S. dollar, cryptocurrency supporters who support decentralized stablecoin options have accepted the use of UST.USDC), tether (USDT) And Binance Dollar (BUSD).

With the popularity of UST, many people in this field began to call it “DeFi USD” because it embodies the spirit of decentralization and is slowly spreading in the multi-chain DeFi field.

Cross-chain integration

LUNA can also be used across several cross-chain bridges, making it easier for LUNA holders to invest in their DeFi ecosystem on Ethereum (Ethereum), Solana (Sol), Fantom (FTM) and Polygon (MATIC)

related: Decentralized exchange aggregator trading volume soars to new highs

The total value locked on Terra hits a record high

On December 5, the increased use of LUNA and UST pushed the total value locked on the Terra blockchain to a record high of US$14.36 billion, and the price of LUNA hit a record high on the same day.

The total value locked on the Terra network. Source: Defi Llama

The rapid rise of TVL makes Terra become TVL’s third-ranked blockchain network, surpassing Solana, whose protocol lock-in value is US$12.08 billion, while the TVL of the first-ranked Ethereum network is US$164.72 billion and Binance Smart Chain Locked in the value of USD 22.4 billion on its blockchain.

VORTECS™ data comes from Cointelegraph Markets Pro Before the recent price increase, the outlook for LUNA was found to be bullish on November 24th.

Cointelegraph’s unique VORTECS™ score is an algorithmic comparison of historical and current market conditions. These data points include a combination of market sentiment, trading volume, recent price changes, and Twitter activity.

VORTECS™ score (green) and CHZ price. source: Cointelegraph Markets Pro

As shown in the figure above, LUNA’s VORTECS™ score began to rise on November 24, and in the next 11 days the price began to rise by 106% and reached a high of 85.

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