What’s hot in crypto this week?
Terra. It's a blockchain platform with a suite of stable coins that are each pegged to different fiat currencies. For example, UST is one of Terra's stable coins; it is pegged to the USD. Another, KRT, is pegged to the South Korean won.
The LUNA token serves as collateral for these stablecoins and powers the Terra blockchain’s delegated proof of stake system, ensuring stability and security of the network.
Why is it hot?
Terra's Mirror Protocol launched on Dec. 3. This protocol is a synthetic asset platform that allows for the tracking, issuing, and trading of real world assets, such as equities, via Mirrored Assets (mAssets). These assets are tied to a real-world asset and mirror their exchange prices, on-chain. Mirror expands the adoption of UST by requiring UST to mint and swap the Mirrored Assets on Terra. So far, Mirror has accumulated more than $90 million worth of UST collateralizing mAssets.
Terra’s on-chain data shows 2,000 new accounts are created daily. The Terra stablecoins are rapidly gaining traction, now with over 2 million total accounts created. On-chain data reveals there are an average of 63,000 active accounts per day.
What’s Flipside’s Take?
Terra and its Mirror Protocol offer users exposure to real-world assets without the constraints of geography, market hours, or having to own the asset. This model reduces many of the barriers to participation in equity markets that typically exist.
As more accounts are created on Terra, more transactions are likely to happen. Each stablecoin transaction on Terra incurs a fee. That fee is paid to stakers of Terra’s token: LUNA. As more transactions happen, holders of the LUNA token have greater incentive to stake their tokens due to the increased opportunity to earn rewards.
Additionally, LUNA has no inflation, so when the adoption of Terra’s stablecoins increases, transaction volumes move up, and LUNA rewards increase. Consequently, LUNA becomes scarcer as more Terra stablecoins are printed to meet demand since minting on Terra requires burning a stablecoin or a unit of LUNA.
This will help continue broader adoption of Terra stablecoins. The LUNA token should keep gaining value due to the increasing demand and usage of Terra stablecoins.
For a deeper look at Terra’s on-chain data check out Terra’s Community Console at terra.flipsidecrypto.com.
The Flipside Crypto Asset Score Tracker provides institutional and sophisticated retail investors the ability to track over 500 cryptocurrencies' fundamentals. FCAS Tracker is currently free to a select group of new users as it continues to develop the product. Visit Flipside here to gain access to Flipside Analytics.