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Why LUNA Is Soaring Today

By Zhiyuan Sun – Oct 4, 2021 at 11:55AM

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This is a cryptocurrency that is rapidly gaining in innovation and traction alike.

What happened

LUNA (LUNC -0.30%) coins were up 12.6% over 24 hours to $48.01 apiece at 8:54 a.m. EDT. After its much-anticipated Columbus-5 upgrade on Sept. 30, the Terra Luna network has emerged to become one of the most competitive blockchain scaling solutions (Layer 1) designed to increase the number of transactions and improve the functionality of programmable agreements (smart contracts). After the update, there's been a notable uptick in activity on Terra Bridge, which enables users to send or receive assets across different blockchains.

So what 

The Columbus-5 upgrade made the following protocol changes to the Terra Luna network: 

  1. Added deflationary pressure to LUNA coins
  2. Integrated the Terra Luna ecosystem with Cosmos' Stargate protocol, enabling the transfer of digital assets across multiple blockchains
  3. Increased the yield of validating transactions on the network by pledging LUNA coins (staking)

These technological advancements have fueled investor demand, causing LUNA to reach a market cap of $19 billion. 

Trading cryptos on one's laptop and phone inside an office.

Image source: Getty Images.

Now what 

But Terra has yet to reach its full potential. Its network's "crown jewel" isn't LUNA coins but TerraUSD (USTC -0.52%). UST is a stablecoin with a 1:1 exchange ratio with the U.S. dollar. But unlike many other stablecoins, it's not backed by fiat currencies but by LUNA. So investors earn rewards by using LUNA to fix UST's exchange rate with USD.

This simultaneously enables capital appreciation from LUNA coins and the stability of transactions using UST, satisfying the needs of both investors and consumers. With increased blockchain integrations, pretty soon, consumers will be able to transact UST on the Solana and Ethereum networks and more. Definitely keep an eye out for the promising coin LUNA. 

Zhiyuan Sun owns shares of Cosmos, Ethereum, and Terra. The Motley Fool owns shares of and recommends Ethereum. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Terra Luna Classic Stock Quote
Terra Luna Classic
$0.00 (-0.30%) $0.00
Ethereum Stock Quote
$1,270.71 (0.17%) $2.16
Solana Stock Quote
$13.64 (0.61%) $0.08
TerraClassicUSD Stock Quote
$0.02 (-0.52%) $0.00
Cosmos Stock Quote
$10.28 (-2.00%) $0.21

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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