Crypto has been off to a rough start in 2022, down 14% to $1.9 trillion so far this year. While no one knows when the sector will recover, now might be a good time to buy quality assets at a discount. Let's explore why Terra (LUNC -10.69%) and Decentraland (MANA 1.41%) could make great additions to your portfolio.
Terra is a blockchain platform designed to facilitate stablecoins, which are crypto tokens pegged to the value of real-world currencies like the U.S. dollar or euro. With a market cap of $29 billion, the asset is wildly successful. And its unique design could help it continue attracting users.
Crypto assets are ideal for people who value financial privacy and decentralization. But they come with a drawback: volatility. While the sector has trended upwards over the long term, it has been a wild and bumpy ride. Terra's stablecoins help solve this problem.
The network has two classes of native tokens: TERRA and LUNA. TERRA represents a suite of stablecoins pegged to real-world currencies. LUNA is a complementary token designed to absorb the volatility of the stablecoins, meaning it grows based on the platform's uptake. Terra's practical and easy-to-understand use cases position it for long-term success in the competitive cryptocurrency industry.
Described as interconnected virtual realities, the metaverse could revolutionize how we use the internet. Decentraland is helping pioneer this concept through blockchain technology. And its early-mover's advantage and impressive real-world partnerships position it for long-term success in this exciting opportunity.
According to analysts at Bloomberg Intelligence, the metaverse could grow to become an $800 billion market by 2024, encompassing gaming, live entertainment, and social media. Blockchain technology is well-suited to this industry because its native tokens can serve as in-game currencies, while non-fungible tokens (NFTs) serve as digital proof of ownership, setting the stage for a dynamic virtual economy.
Launched in 2020, Decentraland is one of the first cryptocurrencies to explore metaverse development. Its platform comprises 90,601 parcels of virtual real estate called LAND, where individual users can customize games and other experiences.
So far, Decentraland has attracted some high-profile partners, including fast-fashion giant Forever21, which opened a temporary storefront in its metaverse in late March. Decentraland also partnered with Samsung to create a virtual space modeled on one of its stores. While these big companies are likely just testing the waters, it could be the beginning of a more expansive push into more complex metaverse offerings.
Which asset is best for you?
Terra and Decentraland are both great ways to bet on a crypto rebound, but they serve different investment strategies. As the ninth-largest cryptocurrency, Terra is an established platform with a widely adopted use case that could give it long-term stability. On the other hand, Decentraland (the 33rd largest crypto) is likely at an earlier stage of its development, giving it more room to grow with potentially higher risks.