The two-year-old LUNA token is the only cryptocurrency that caused surprise by surpassing DOGE, SHIB, and Avalanche. The developers burn coins to reduce the supply and the working capital to 1 billion units.
The leading cryptocurrencies on the market recently suffered a significant correction in their prices, which fell by almost 20%. Altcoins like Binance Coin, Solana, Cardano, and XRP followed Bitcoin in the crash.
LUNA, the native token of the Terra blockchain, is the only cryptocurrency that caused surprise. The two-year-old asset has already entered the top 10, surpassing Dogecoin, Shiba Inu, and Avalanche.
Terra token LUNA has remained at excellent levels and recently gained more than 10%. It has also ensured a value going from USD 0.65 in January to above USD 60 in the last week.
Amid the crash of cryptocurrencies, LUNA brought 30% gains to its investors and reached a new all-time high of USD 72. In early August, the crypto asset was trading below USD 12 and generated 500% of profits in a matter of months.
They Burn Coins to Prevent Price Drops
The team behind the project developed a system to burn coins to prevent the price from dropping. The Terra blockchain aims at creating a better digital financial system outside of financial institutions and FinTechs.
LUNA, the official cryptocurrency of the Terra ecosystem, is currently trading at around USD 70. However, on the blockchain, there are also stablecoins, which always maintain the same value as USD 1 and are not volatile.
The most popular cryptocurrency in the project is TerraUSD (UST), which precedes other stablecoins like TerraSDR (SDT), TerraKRW (KRT), and TerraMNT (MNT). All those cryptocurrencies are decentralized, as they do not depend on any government or traditional financial entity.
Investors Buy Stablecoins Having Parity with the US Dollar
The fees (called gas) for operating on Terra are lower than those of other networks like Ethereum. During a cryptocurrency market crash, investors may choose between not selling and enduring the decline. They may also purchase stablecoins having parity with the US dollar to invest in other volatile assets. Besides, they may take advantage of their low price or sell all their investments for fear that the decline will continue.
LUNA token holders decided to take refuge in UST, the primary stablecoin of the project. That cryptocurrency has one-to-one parity with the US dollar and always maintains its value.
When investors bought UST with their LUNA tokens, the developers burned LUNA to reduce the supply and the working capital. In that way, they stabilized and raised the value of the cryptocurrency, becoming the only asset whose price rose during the crash.
As the protocol burns LUNA coins, the UST stablecoin will maintain its stability and one-to-one parity with the US dollar. According to CoinMarketCap, Terra has a supply of 1 billion tokens, which it cannot exceed. If it happens, LUNA burns until returning to the balanced supply level.
The protocol has burned around USD 4 billion worth of LUNA, and the circulating supply is around 383,509,658 units.
LUNA is currently trading at around USD 61.66 and has accumulated a 2.9% profit in the last few hours. Its trading volume is above USD 1.54 billion, and its market capitalization is about USD 23.12 billion, according to CoinGecko.
By Alexander Salazar
