Terra (LUNA) overtakes Solana (SOL) to become 6th largest cryptocurrency

Terra (LUNA), the eponymous blockchain’s native token overtakes Solana (SOL) to become the sixth-largest crypto token by market capitalization on Wednesday. LUNA also hit a new high as its DeFi adoption surged.

LUNA rose as much as 5%, briefly reaching a record high of $119.10, with its market capitalization standing at $41.3 billion. Binance’s recent surge can be attributed to the fact that it now offers UST staking at a nearly 20% yield.

Following its February lows in 2022, the token has been on a tear. The growing popularity of UST and the Terra blockchain as a DeFi platform account for the majority of it.

DeFi expansion a key factor in LUNA rally. 

Terra’s popularity in the DeFi space is aided by the community’s effort to maintain liquidity. Terra is currently the second-largest DeFi blockchain in terms of total value locked which stands at $21 billion.

This in turn expanded the use of LUNA, given that it is the primary medium for transacting on the chain.

Terra’s Anchor Protocol (ANC), the chain’s biggest protocol, has also grown in popularity by offering the biggest yields in DeFi, at around 20%. Despite a recent vote to reduce yields, the platform still commands over $16 billion in TVL, the third-highest among DeFi platforms.

Furthermore, the Terra community regularly burns LUNA to mint UST —a move that reduces LUNA’s overall supply and boosts its price. Terra Analytics reports that nearly three million tokens have been burned in the past five days. This pulls LUNA’s total supply down to a record low of 351 million tokens.

Terra eyes stablecoin dominance

Terra founder, Do Kwon has reiterated his goal of making UST the most popular stablecoin. To that purpose, the Terra community has been steadily acquiring Bitcoin (BTC) to use as a reserve for UST, a move that has also boosted the popularity of LUNA.

The goal is not to become the largest stablecoin on the Terra blockchain, so we expand to say the Solana, Avalanche, Ethereum, and Polygon ecosystems. We plan to be everywhere where there are developers and users.

Kwon said in a recent interview.

UST is the world’s largest algorithmically-backed stablecoin with a dollar peg maintained through a mix of reserves and tokenomics.

Kwon plans to amass as much as $10 billion worth of Bitcoin to use as reserves. This move would be beneficial to LUNA because it assures enough liquidity on all Terra’s DeFi protocols.

So far, the Terra community has amassed at least $3 billion worth of Bitcoin.