DeFi Value on Terra Surges to Record $21B as LUNA Tops $100

Thursday’s dip to $85 for LUNA tokens was erased overnight.

AccessTimeIconDec 24, 2021 at 10:46 a.m. UTC
Updated Dec 27, 2021 at 3:41 p.m. UTC

Shaurya is an analyst/editor for CoinDesk's markets team in Asia.

LUNA, the native token of decentralized payments network Terra, jumped to over $100 in European trading hours on Friday to lead a “Santa rally” in crypto markets.

After LUNA’s 10% decline to $85 on Thursday, the token went back to its previous high of $96 in early trading hours in Asia. Then an announcement by crypto exchange Binance that it will list UST, a stablecoin issued on the Terra network, pushed LUNA above $100. The price met resistance at that level and was down 5 cents at press time.

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LUNA tokens have seen a monthlong uptrend. (TradingView)

Rising prices caused the total value locked (TVL) in decentralized finance (DeFi) protocols on Terra to cross the $21 billion mark, data from analytics tool DeFi Llama showed, making it the largest DeFi network after Ethereum. The figure has grown by almost $3 billion from Wednesday’s $18 billion level.

Of the total, over $9 billion is locked on Anchor, a stablecoin-based yield-generating application. For TerraSwap, a decentralized exchange built with Terra smart contracts, TVL jumped 81% to over $2 billion from last week.

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Top DeFi protocols on Terra by TVL. (DeFI Llama)

DeFi protocols rely on smart contracts instead of middlemen to provide financial services such as lending, borrowing and trading.

The value is split among 13 protocols, or over $1.6 billion per protocol on average. That compares with $73 million per protocol on Binance Smart Chain, the third-largest DeFi network, which has $17 billion locked on 232 protocols.

Some say applications like Anchor add to Terra’s allure for investors.

“A 20% APY (annual percentage yield) on UST deposits through the Anchor Protocol is very appealing because capital flows from price-volatile assets to more risk-averse yield-bearing positions,” Marvin Steinberg, founder of investment firm Steinberg Invest, said in a Telegram message with CoinDesk.

LUNA’s price increase is part of a broader multimonth rally, one buoyed by November′s changes to its token mechanisms – such as a ”burn” feature that periodically decreases supply – and increased activity on DeFi applications built on Terra. That’s propelled LUNA to become the ninth-largest cryptocurrency by market capitalization at $36 billion.


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Shaurya is an analyst/editor for CoinDesk's markets team in Asia.

CoinDesk - Unknown

Shaurya is an analyst/editor for CoinDesk's markets team in Asia.