UST, one of the stablecoins of the Terra project, has become the largest stablecoin by market capitalization today, after having surpassed its Ethereum-based rival, DAI. UST is now the largest decentralized stablecoin in the market, closing a year of growth for the Terra ecosystem, which is now among the most valuable top ten cryptocurrency projects in the market.
UST Flips DAI As The Most Valuable Decentralized Stablecoin
UST, one of the stablecoins derived from the Terra project, has become the most valuable project of its kind by market cap, taking the spot that DAI, another decentralized stablecoin, once held. This closes a year of growth for the Terra ecosystem and for UST, which managed to swell from a market capitalization of $182 million at the start of 2021, to more than $9 billion this December.
Now, UST cements its new position as the fourth stablecoin with the most market cap, behind USDT, USDC, and BUSD, all centralized stablecoins. While these work by depositing collateral to back the tokens in the market, UST is an algorithmic stablecoin that uses another token of the Terra ecosystem (LUNA) to balance its peg against the U.S. dollar’s value.
Other Decentralized Stablecoins and LUNA Also Grew
In the last 30 days, other decentralized stablecoins have also grown in terms of market cap. Tokens like Frax and MIM, have gained more than 30%, with FRAX even reaching a 40% in terms of market cap. These decentralized tokens do not depend on a centralized point of issuance and cannot be blocked by a central authority.
Due to the heightened attention that the rise of stablecoins like USDT and USDC are facing from regulators, there are some that believe these alternative stablecoins will experience further growth, with users flocking to these alternatives for a number of reasons. But even with all this growth, USDT is still the most used stablecoin on exchanges, with more than $68 billion worth of the token changing hands yesterday.
The rise of UST has also propelled the price of LUNA, its sibling token, to ATH values. To mint UST, users in the Terra protocol need to burn LUNA, and this makes the token more scarce. LUNA’s price rose from a little more than $0.64 this January to more than $80 dollars today, a 125x growth in less than a year.
Do Kwon, founder and CEO of Terraform Labs has declared he will propose to establish a backup for UST in the form of bitcoin (BTC) and other cryptocurrencies using the token governance method, aiming to shield its peg from volatility during stressful times in the market.
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