UST, one stablecoin derived from Terra, has taken the DAI spot as the most valued project of its type by market capital. This marks the end of a year of growth in the Terra ecosystem as well as UST. UST’s market capitalization grew from $182 million at 2021 to $9 billion by December.
UST now holds the fourth spot in the stablecoin market, just behind USDT and USDC. These are all centralized stablecoins. These stablecoins work by depositing collateral in order to back tokens in the marketplace. However, UST is an algorithmic stabilitycoin that uses another token from the Terra ecosystem (LUNA), to balance its peg to the U.S. dollars’ value.
Other Decentralized Stablecoins, LUNA and Others Also Grew
Other decentralized stablecoins also saw a rise in market cap over the past 30 days. Frax and MIM have seen a more than 30% increase in market cap, while FRAX has reached a 40% market cap. These tokens are not dependent on a centralized point for issuance and can’t be blocked by any central authority.
Some believe that stablecoins such as USDT or USDC will see more attention from regulators. This is because users are flocking to these alternative stablecoins for many reasons. USDT remains the most popular stablecoin, changing hands for more than $68 million yesterday.
The price of LUNA (its sibling token) has seen its value rise as well, owing to UST’s popularity. Users in Terra protocol must burn LUNA to make UST. This makes the token less common. The price of LUNA rose from $0.64 in January to $80 today, a 125x increase in less than a calendar year.
Do Kwon is the founder and CEO at Terraform Labs. He has declared he proposes to create a backup for UST using bitcoin ( Bitcoin) or other cryptocurrencies through the token governance method. This will help to protect the peg from volatility in stressful market times.
