The beginning of March has been good to ‘Ethereum killer’ ecosystems, particularly Solana and Terra, which arguably proved to be the best performers. The latter has posted an uptrend in the decentralized finance space, while its native token has recorded decent gains over the week. Detail below:
Terra flips Ethereum for second place in staked value only behind Solana
The price of Terra’s native token LUNA has over the past week been on an ascent and the result is that Terra has now flipped Ethereum for second place in total staked value.
LUNA/USD 7-day trading chart
Terra surpassed Ethereum in staked value at the start of the month, according to on-chain analytics and data provider Staking Rewards. It now has $28.671 billion in staked value with an annualized reward rate (APR) of 6.62%. This places it only behind Solana at $35.307 billion and above Ethereum at $25.935 billion.
Total Staked Value table
The on-chain mechanics of demand and supply that peg Terra’s algorithmic UST stable coin are to thank for the spike in LUNA prices that drove Terra’s staked value to second place. Since LUNA backs UST, whenever the supply of the stable coin changes, say it increases, users are incentivized to burn LUNA to maintain the peg of the stable coin.
Therefore, as new UST tokens were minted to increase the supply from 11.26 million to around 12.92 million tokens between the start and end of February, according to data provided by Smart Stake, $2.57 billion worth of LUNA tokens were burned to retain the peg. The burn explains why LUNA, currently trading $89.81, has spiked 89.93% over the last month and 38.3% in the last week.
Notably, according to DeFiLlama, Ethereum is still king in total value locked (TVL) with a massive $113.85 billion against Terra’s $23.17 billion. The difference exists because, unlike the total staked value metric, TVL includes the value of assets locked across all DeFi protocols and not just the staked ETH/ LUNA.
Anchor surges 300% month-on-month and achieves $4.95
ANC, Anchor’s inflationary protocol token, yesterday rebounded by over 300% on the month, climbing as high as $4.95. The protocol has since corrected and is now trading $4.87, but still has a substantial 218% spike over the last month.
As a governance token across Terra’s decentralized finance ecosystem, ANC gives rewards of 20% APY to depositors of the UST stable coin. The massive APY (currently highest) that Terra offers has caused this price surge, according to Apollo Capital co-founder Henrik Andersson.
Andersson argues that while Anchor offers this sky-high rewards rate, the yield offered on stable coins by other aggregator platforms such as Convex and Yearn has been falling. The Apollo Capital executive said that this, in addition to new tokenomics, is causing the massive recovery that Anchor Protocol has experienced.
Last month, following the conclusion of a vote, Terraform Labs CEO DO Kwon confirmed Anchor’s reserve was getting boosted with an additional 450 million UST ($450 million). This helped enhance the backing (which had fallen to $6.6 million) that supports the 20% APY since the number of depositors (lenders) had increased dramatically, but the borrowers dried up.
Anchor Protocol keeps the Terra ecosystem afloat
With markets falling early Friday, DeFi ecosystems have shed millions in value, but the Terra ecosystem has largely remained steady, only falling 1.39% in the last 24 hours.
To thank is its leading protocol, Anchor, which currently has a TVL of approximately $11.52 billion, and only recently reached its all-time high as it clocked $11.63 billion yesterday. The upturn by Anchor to defy the dip it saw at the end of January (it fetched $6.83 billion on the 31st) primarily happened over the last week of February after the Luna Foundation Guard injected cash into the protocol’s reserves.
Terra DeFi TVL
Anchor’s growth has widened the rift between Terra and the BNB Chain, which ranks third in TVL. The former now has almost double the locked value of the latter, $23.17 billion against $12.08 billion.
To learn more about Terra visit our Investing in Terra guide.
The post Terra (LUNA) and Anchor Protocol (ANC) Tokens Soar in The First Week of March appeared first on Securities.io.
