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 May 11, 2023 at 6:59 p.m. UTC
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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.

LUNA tokens have seen a monthlong uptrend. (TradingView)
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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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 Malwa

Shaurya is the Deputy Managing Editor for the Data & Tokens team, focusing on decentralized finance, markets, on-chain data, and governance across all major and minor blockchains.


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