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 Makes DAI Most Valuable Decentralized Stablecoin
UST, one of the stablecoins derived from the Terra project, has become the most valuable project of its kind in terms of market capitalization, taking the place that DAI, another decentralized stablecoin, once held. This ends a year of growth for the Terra ecosystem and for UST, which managed to grow from a market cap of $ 182 million in early 2021 to over $ 9 billion in 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 have also increased
Over the past 30 days, other decentralized stablecoins have also increased in terms of market capitalization. Tokens like Frax and MIM gained over 30%, with FRAX even reaching 40% in terms of market cap. These decentralized tokens do not depend on a centralized issue point 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 sister token, to ATH values. To create UST, Terra protocol users must burn LUNA, which makes the token more scarce. LUNA’s price has risen from just over $ 0.64 in January to over $ 80 today, growing 125 times 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.
