Terra (LUNC 0.85%), up 43% over the past 30 days, now makes up more than 2% of the total crypto market cap for the first time. What's behind the enthusiasm for Terra, and why is it ready for even bigger and better things in 2022?
To discuss investing in Terra, it's worth pointing out that Terra is a digital ecosystem, and LUNA is its native token. Terra's ecosystem also includes many stablecoins such as TerraUST (USTC 0.51%), which is a stablecoin based on the U.S. dollar.
By investing in LUNA, you are part of the growth of the Terra ecosystem. As more demand for UST is created, LUNA is automatically burned, making the remaining tokens more valuable (almost like a share buyback in the traditional stock market). The growth of the Terra ecosystem is exploding for a variety of reasons.
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A lot of people are already using Terra
There are nearly 3.5 million unique Terra wallet addresses, compared to about 900,000 at the beginning of 2020. That works out to 400% user growth in two years.
Terra has gained a lot of traction in this time frame. Many people are already using Terra and the stablecoins in its ecosystem every day. For example, Chai, a South Korean wallet app founded by Terra co-founder Do Kwon, has over 2.5 million users. These customers and merchants are already using UST for payments at over 50 e-commerce outlets and even some offline locations in South Korea.
Astroport, a decentralized exchange built on Terra, is only a few months old, but it has already worked its way up to become the second-largest decentralized exchange in terms of daily volume.
Stablecoin demand is surging
The Terra ecosystem features an array of stablecoins -- most prominently TerraUSD, and also stablecoins based on the South Korean won and the Mongolian tugrik. Interest in stablecoins is growing for a variety of reasons, ranging from rising geopolitical risks around the world to the increasing ease of using them for payments. The market cap of TerraUSD is now over $13 billion, making it the third-largest stablecoin in the world, trailing only Tether (USDT -0.03%) and USD Coin (USDC -0.01%). TerraUSD had a market cap of just under $1 billion last March, indicating a high demand for the product. As a go-to destination for stablecoins worldwide, Terra and the LUNA token will be key beneficiaries of this trend.
Make Way for NFTs
If the surging usage of Terra and growing interest in stablecoins weren't enough, non-fungible tokens (NFTs) on Terra are growing in prominence as well. Derby Stars is a new metaverse horse racing game where users can buy, sell, and breed digital racehorses on the Terra blockchain. The project raised money from some prominent investors and venture capitalists in the crypto space, including Jump Crypto, Mechanism Capital, Arrington Capital, and others. The game has not yet launched, but it already has over 22,000 followers on Twitter and over 28,000 on Discord, indicating that the game is highly anticipated.
Outside of NFTs, there are a lot of other fascinating applications built on Terra. For example, Mirror is a protocol that allows users to trade "synthetic" stocks such as a tokenized version of Tesla (TSLA 1.85%) that trades 24/7.
Is Terra a Buy?
Terra has risen a lot over the past year and has passed tokens like Cardano (ADA -3.16%) and Solana (SOL 0.56%) in market cap. But even after this impressive run, Terra could just be getting started. User growth is soaring, demand for Terra's stablecoins is growing, interesting protocols like Mirror and new applications like the Derby Stars NFT coming on board show that Terra's uses will expand from here. Terra is coming into its own as a full-fledged financial ecosystem and is worthy of long-term investment because it could be on the precipice of becoming a global financial powerhouse.
