It’s common place these days to sit in a room with Crypto enthusiast and hear the word moon so often that you will swear you are in a NASA space conference. You will be totally forgiven if you thought that this is one of those moments again. Well, I can tell you Terra Luna is literally heading to the moon. Okay! Okay, GT…What is Terra Luna?
Well, let’s start with some background. Terra is a blockchain designed by Terraform labs, owned by Daniel Shin and Do Kwan. If you are wondering what the significance is then, you should know that Daniel founded TMON or Ticket Monster, the South Korean E-Commerce giant; the same giant behind CHAI mobile payments app, that is backed by Softbank and SK.
If that does not peak your interest, then you should know that Terra is also backed by the Terra Alliance, 15 of the largest E-commerce firms in Asia with $25bn USD of annual transactions and 45 million network users. So yes, Terra is a pretty big deal. So where does the LUNA fit into this? Well, Terra is the developer of the stablecoin known as UST. UST is an algorithmic stablecoin that is pegged to the USD. What makes UST different from every other stablecoin like USDC and USDT is, it does not use collateral like corporate debt or fiat, instead it uses LUNA. If you want to know exactly how this works, here is a very cool video from Terraform labs — Click here.
In a nutshell the more applications that get built on Terra, the more the demand is for UST and the more demand for UST we have the scarcer LUNA will be. Now we know that the demand for LUNA will keep increasing not only because of the use case in the Chai app and TMON E-commerce ecosystem but also the brand new Terra Defi Eco system that Terraform labs have created.
What brand new eco system GT? That’s right, welcome to the Mirror protocol. Yes, one of Terra’s DEX Defi offerings is called Mirror. This is a protocol that allows users to buy and sell stocks using UST with options to also add liquidity to UST/TESLA pairs and earn the MIR token which as of time of writing is trading at $4.30.
This has not only increased demand for UST as users all over the world can buy and sell exposure to US stocks without needing to own US Dollars, in addition to the Mirror protocol, Terra also has its Anchor protocol which is its own version of Aave, a lending and staking platform that allows users to collateralize LUNA to access Defi loans. Anchor will also earn you a cool 20% on your UST, unlike other stable coin yields that always changing, Anchor can offer a stable 20% yield adding to the demand for UST.
If you still need convincing then you should know that hodlers of LUNA can become validators by staking any amount of their LUNA to become validators of the network. The 21 day unlock rule with staked LUNA means we will not see LUNA hitting the market anytime soon if their is a dip which explains LUNA’s parabolic run despite previous dips in Bitcoin.
So looking at adoption and ecosystem, it is pretty clear that LUNA has a lot of potential as do most of the assets under the Terra ecosystem umbrella but what we must really take into account with this project is the money behind it from Coinbase labs to Galaxy digital, from TMON to Softbank; partnerships from Solana to Pantera Capital, the list keeps growing. While the regulatory risks around stablecoins will likely be a clear and present danger, we have long understood that algorithmic stablecoins are the solution to the current stablecoin mess the crypto space is in.
So I for one will remain bullish on Terra LUNA. While I refrain from price predictions, looking at the already parabolic rise of this coin, the future is indeed bright as the demand for UST continues to grow, we can expect LUNA to continue to be scarce and long-term holders of LUNA are likely to reap massive rewards. Time will tell but don’t be surprised if you wake up one morning to a $100 LUNA before the end of this bull market. Till next time, Adios! Amigos.