Terra’s stablecoin UST trumps MakerDAO’s DAI with 5x increase in valuation this year

  • Terra’s stablecoin UST hit $10 billion earlier this week.
  • The platform’s other token, Luna, has also touched over $31 billion in market capitalization.
  • Terra has surpassed MakerDAO’s DAI token, its closet competitor, in terms of usage in the DeFi ecosystem.

Stablecoins have sort of lost their charm over the past few years. But open source blockchain platform, Terra, might help change that, while also reinforcing the role these coins play in the growing decentralised finance (DeFi) ecosystem.

According to digital currency analysis website,
Coingecko, the platform’s stablecoin — UST — hit $10 billion in market value this past Sunday, which is almost a 5 times surge in its valuation this year from around $200 million in January.

The coin has also surpassed DAI, its closest competitor, and become the second largest decentralised stablecoin after Tether, which hosts the USDT token.

DAI is hosted by MakerDao, a blockchain-based decentralised autonomous organisation (DAO). At the time of writing, DAI had a total market capitalisation of about $8.9 billion, while Terra’s UST was at around $10.1 billion, according to Coingecko’s listings.

UST had actually surpassed DAI earlier this month, but it hadn’t hit the $10 billion mark until earlier this week. It’s a sign that the Terra blockchain has become an integral part of the growing DeFi ecosystem worldwide. The platform was launched in January 2018, about a year after MakerDAO’s DAI came into being.

UST token isn’t the only cryptocurrency that Terra can flaunt

While the stablecoin UST token has done well,
Terra’s LUNA token has been no slouch either. The token ranks at number nine on Coingecko’s lists and has a market capitalization of over $31 billion.

In November, JPMorgan said that the total value locked (TVL) in the Ethereum-based DeFi ecosystem was close to $200 billion, up over ten times since 2020. The TVL in the Terra platform currently stands at $18 billion, according to blockchain research platform
DeFi Llama.

It’s popularity can be attributed to the fact that platforms like Terra help firms bypass the volatility of Ethereum and other cryptocurrencies, since their values are tied more closely to the US Dollar and hence don’t fluctuate as rapidly as Bitcoin or Ethereum.

However, JPMorgan also warned that the growth of DeFi platforms “reflects a valuation effect” and may not be as impressive as it seems. “However this impressive growth in dollar terms mostly reflects a valuation effect, i.e. the mere fact that the Ethereum price has risen by 1,000% over the past year,” the bank
said.

SEE ALSO:
End of year brings a little crypto cheer
Binance coin’s massive 1,300% gain in 2021 beat both bitcoin and ether, cementing its spot as the world’s 3rd-biggest crypto

Six reasons why India’s central bank believes cryptocurrencies threaten financial stability

This news is republished from another source. You can check the original article here

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