LUNA Price Fueled by New Coinbase Stablecoin & Tokenomics
Terra Blockchain and Its Native LUNA Token
A blockchain developed by Terraform Labs in 2018, Terra is a project that is powering the startup’s cryptocurrencies and decentralized apps. It is an ambitious protocol that is working to build a stablecoin by way of e-commerce, aiming to complement existing payment solutions with a twist. Ultimately, Terra’s protocol aims to create cryptocurrencies with stable prices.
The key to the stabilization is in Terra’s native currency, LUNA. Aside from its utility in governance and staking, LUNA plays a central role in helping to control the supply of the varying stablecoins on Terra. In particular, LUNA is used to add more stablecoins to Terra – most notably, TerraUSD (UST) – in times of high demand in order to minimize any market demands on price. In turn, LUNA that’s used to create (or “mint”) the stablecoin will be removed from its total supply forever – otherwise, known as “burning.”
The economics of LUNA, often referred to as tokenomics, has led to massive price appreciation of 3,900% in 2021 – based on pricing at the time of this article – as the deflationary nature of the supply continues to lure in more investors. The recipe for continued growth is clear: greater demand for Terra’s stablecoins will lead to higher demand and lower supply of LUNA.
UST – New Coinbase Stablecoin & Fuel for LUNA Price Growth
The UST stablecoin is one of the fastest growing stable coins around, with its market cap having expanded by nearly ten-fold in just the past few months. And there is no shortage of fuel added to the fire for LUNA’s price growth. A recent Coinbase listing of UST provided just the right amount of excitement and credibility to catapult the algorithmic stable coin upwards.
Source: Terra Daily
In an announcement made on their official Twitter account, Coinbase Pros said, “Transfers for IOTX, ORN, QUICK, TRIBE & UST are now available in the regions where trading is supported”. This was immediately seen as great news for Terra as it would expand the number of exchanges that support UST and make cashing out even simpler – and it was naturally met with a tonne of excitement from investors. Coinbase is also one of the most trusted and regulated crypto exchanges, and one that is publicly listed. The fact that UST was screened and given a green light also worked to give it a vote of confidence.
New Upgrade & DeFi Fueling Growth of Terra Stablecoins
A highly anticipated main net upgrade to Terra’s ecosystem, Columbus-5 is one of the most important ones on the Terra blockchain to date. The Columbus-5 update is set to simplify the system’s tokenomics, making operations smoother and making LUNA and UST even more valuable.
First of all, much like Ethereum’s EIP 1559 upgrade, the Columbus-5 upgrade will burn a sizable sum of LUNA in order to make the LUNA to UST conversion more efficient. As more and more LUNA burns, the other coins in the ecosystem become more valuable, primarily UST.
The upgrade will also give swap fees to LUNA stakers which means that as Terra’s system grows, Luna rewards will also grow accordingly. Columbus-5 will also provide support for other assets, increasing utility and expanding user adoption. Simply put, Col-5 is a game-changer for Terra and LUNA!
The markets and investors have continued to turn their sights to the altcoin scene, something that is well reflected in the growth of Terra’s stablecoins. Terra’s rise signifies the market’s demand for increased scalability, primarily proof-of-stake mechanisms.