Key Takeaways:
- UST rose from $180 million in 2021 to $17.5 billion today.
- LUNA surged by more than 15% following announcement.
LAGOS (CoinChapter.com) — Terra ecosystem’s recent growth doesn’t seem to be slowing down as the project has hit another major milestone.
In detail, Terra’s fast-growing stablecoin (UST) has displaced Binance USD to become the third-largest stablecoin by market cap. According to data from Coingecko, TerraUSD UST’s total market capitalization surged significantly and currently sits at $17.5 billion.
Additionally, the stablecoin rose impressively from about $180 million in market cap at the beginning of 2021 to $17.5 billion as of April 18, 2022. UST rallied by around 15% over the past 30 days, surpassing BUSD, with a market cap of $17.4 billion.
The data also indicated that UST has been recording a rapid pump since the latter part of 2021, with the market cap increasing by 525%.
Terra stablecoin is now only behind Tether (USDT) with $82.8 billion and USD Coin (USDC) with $50 billion. Although, it is worth noting that the gap at this point is quite substantial.
What is Terra’s UST?
Firstly, Terra UST is a stablecoin usually pegged to a state-issued fiat currency such as the U.S. dollar. However, unlike the two leading stablecoin, USDT and USDC, UST uses a different method to keep its price stable.
Terra uses an algorithm to hold its dollar peg instead of relying on a reserve of assets to maintain its stablecoin. Notably, this involves using a smart contract-based algorithm to keep the price of UST anchored to $1 by burning its native token LUNA to mint new UST tokens.
It is worth noting that Terraform Labs is the organization behind the UST and LUNA token.
LUNA Rallies 15% Following UST Milestone Achievement
Terra native token on the day surged by more than 15% following news of UST becoming the third-largest stablecoin. At the time of publication, the token was trading around $90 with a market cap of $31.9 billion.
Recall that LUNA recently attained a new all-time high reaching $106.14. Meanwhile, Terra community Luna Foundation Guard (LFG) actions have been credited for increasing both assets.
Last month, LFG disclosed that it had raised $1 billion in a private token sale of LUNA. The funds will be focused on Terra stablecoin’s reserve denominated in Bitcoin. Notably, at the time of writing, LFG’s Bitcoin address holds 27784.9 BTC or roughly $1.32 billion.
Additionally, Do Kwon, the firm’s co-founder and CEO behind the Terra blockchain, confirmed that it had purchased more than $1 billion in Bitcoin since the end of January.
Kwon had earlier announced that UST would be backed by a reserve of Bitcoin that could eventually reach $10 billion. He tweeted on March 22 that he has $3 billion in funds ready to make purchases to back the algorithm stablecoin.
“The reason why we are particularly interested in Bitcoin is because we believe that is the strongest digital reserve asset,” Kwon said in an interview with Bloomberg.
