The Terra stablecoin is already the third with the highest accumulated value in the market, with more than 17.5 billion dollars in capitalization. With that amount of total market value, it outperforms the dollar-pegged currency of the largest exchange in the ecosystem.
During the early hours of this Monday, April 18, TerraUSD (UST) exceeded that capitalization figure. Now, it is only ahead of Tether (USDT) and USD Coin (USDC) in the fiat-pegged coin market.
With this new impetus, UST ratifies the trend it had been experiencing recently. As we reviewed in The USA Herald last week, the Terra protocol stablecoin led the increase in market value of stablecoins, with more than 60% increase during the first quarter of this year.
Although all major coins of this type grew in that period, TerraUSD’s rally far outpaced the rest. Already last December, UST had overtaken DAI as the fourth most capitalized stablecoin.
The rest of the way is very long for TerraUSD to position itself higher in the stablecoin market. Still less than $20 billion in capitalization, the coin is more than 50% undervalued by the second largest in the market, USDC, with a capitalization of more than $50 billion. Not to mention Tether, which exceeds 80,000 million.
Reserves in bitcoin, the axis of trust in Terra
Although very far from the main ones in the market, the growth of UST in recent months is very remarkable. As we have already mentioned in this newspaper, UST is a stablecoin whose anchor to the value of the dollar is maintained through the issuance or burning of the token. That is, it is not based on collateral.
In the cases of USDC or Tether, their anchors are based on the reserves escrowed by their issuers; while DAI relies on user deposits as collateral in other cryptocurrencies.
UST’s recent growth reflects an increase in trust and interest from these users. Some attribute much of this steep rise in TerraUSD to the Luna Foundation’s (part of the Terra ecosystem) policy of holding reserves in bitcoin (BTC), the leading cryptocurrency on the market. Although Terra currently does not use these funds or those of other currencies such as USDC or USDT as collateral, it is not ruled out that in the future some use will be made of these reserves as collateral.
In recent months, the foundation has been aggressively accumulating BTC. With more than 28,000 BTC in its coffers (just over 1,000 million dollars), the Luna Foundation is the second private company with the most accumulated BTC.
The goal of the foundation is to accumulate about 10,000 million dollars in the main cryptocurrency in the market. Right now, they have 10% of that goal.