What happened
Bullish sentiment continues to flood the crypto market today, with investors generally taking a positive view of most digital assets following yesterday's anticipated 25-basis-point interest rate hike from the Federal Reserve. However, the leading large-cap cryptocurrency that's gaining the most attention today is Avalanche (AVAX 3.15%). This proof-of-stake crypto has surged 13.3% higher over the past 24 hours, as of 1 p.m. ET Thursday.
This move came as a direct result of the launch of borrowing and trading capabilities of Terra's UST stablecoin on the Avalanche network. Reports indicate that users are now able to both deposit and earn yield on UST using Avalanche, and engage in borrowing for UST tokens as well.
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So what
Earlier this year, various reports suggested that Avalanche, Terra Labs, Pangolin, and Axelar were working to bring UST to the Avalanche network. The expectation with this launch is that increased stablecoin usage and transaction volumes should drive increased user interest overall in the Avalanche platform.
UST is one of the most intriguing stablecoins, in my opinion. As an algorithmic stablecoin supported by Terra's LUNA token in an algorithmic fashion, this stablecoin seeks to truly innovate in a sector that has come under fire for how various asset-backed tokens are actually backed.
Now what
There are a number of conceptual models that investors can use to try to value a specific cryptocurrency. One of the most popular valuation methodologies is related to total value locked (TVL) within a given network -- how much is staked or held within a specific ecosystem. In this case, the ability of Avalanche to offer yields on UST deposits could propel its TVL higher, driving the valuation of its AVAX token higher over time.
Of course, it's still early innings for this new feature. But investors bullish on the ability of the development team behind Avalanche to continue to innovate certainly like what they see today.
