Terra’s UST stablecoin is on track to surpass Dogecoin by market cap due to growing demand
by Terra UST became the third-largest stablecoin by market capitalization, toppling Binance USD (BUSD).
With a market cap of $17.5 billion, it is close to surpassing Dogecoin, the largest meme coin.
Terra, a smart contract platform that rivals Ethereum and other similar blockchain platforms, has been in the news for the past month due to the non-profit Luna Foundation Guard (LFG ).
The LFG has built a massive Bitcoin reserve in order to maintain the stability of the UST cryptocurrency, which is supposed to maintain the U.S. dollar peg.
Tether (USDT) and USD Coin (USDC) remain the two largest stablecoins by market cap. They are worth $85.7 billion and $50 billion respectively. These stablecoins rely on centralized entities to maintain their peg. UST is an algorithmic stablecoin, which means that its price is stabilized using an algorithm powered by a smart contract.
Terra presents arbitrage opportunities for its users by allowing them to burn LUNA governance tokens in order to dilute the supply of the UST stablecoin and keep its price strictly at $1. Alternatively, it is also possible to make a profit by exchanging UST tokens for LUNA, thus preventing the former from losing its peg.
Like reported by U.Today, the LFG acquired an additional $105 million worth of Bitcoin last week. Ultimately, Terra plans to hold and purchase $10 billion worth of Bitcoin. At press time, the address associated with the nonprofit holds $1.65 billion of the flagship cryptocurrency.
