Terra, whose LUNA token has defied the crypto market's doldrums to break into the top ten most valuable cryptocurrencies by market capitalization, is now the fifth-largest smart contract platform today. Earlier this week, the price of Terra's LUNA <a href="https://www.cryptoknowmics.com/news/luna-technical-analysis-one-of-the-best-performers-of-2021-touching-ath-of-84/">token</a> touched an all-time high of $83.81 as it continues to move higher. LUNA's price has increased by 12,000% year over year. This means that a $10,000 investment in the token on January 1 would be worth around $1,200,000.

Several variables have contributed to the increase in LUNA price. The presence of delta neutral traders, a group of investors that hold several positions to offset delta risk, was signaled by the negative funding rate in key exchanges, according to Delphi Digital, a top cryptocurrency research firm. The year 2021 was a <a href="https://www.cryptoknowmics.com/news/terras-luna-token-breaks-new-all-time-high/">great success</a> for LUNA Token. With its price gaining significant attention from all around the globe, the token has a bullish outlook throughout the year. 
<h2>LUNA on a Highway to Bullish Trend</h2>
The coin is trading at $99.90, with a global market cap of $36 billion, at the time of writing. Terra is a blockchain protocol that powers price-stable global payment networks with fiat-pegged stablecoins. Terra, according to its white paper, combines the price stability and widespread use of fiat currencies with the censorship resistance of Bitcoin to provide quick and economical transactions. One of the authors of the original Terra white paper is Terra Do Kwon's co-founder. Based on the belief that a price-stable cryptocurrency combines the greatest aspects of fiat currencies and Bitcoin, the report proposed Terra, a cryptocurrency that is both price-stable and growth-driven.

LUNA, Terra's native currency, was created for governance and mining and can be used to issue stablecoins, pay network fees, and vote in governance elections. It is a network token with a wide range of uses that is critical to the Terra platform's success. The total value locked has increased by 55% within a week. TVL is a metric used to assess the health of a DeFi system that indicates the number of assets currently staked in a protocol. Simply said, it is the total underlying supply. It has now surpassed Binance Smart Chain in terms of TVL thanks to the increase.
<h2>DeFi Value on Terra Surges to Record $21B</h2>
Traders profited from LUNA's 10% drop to $85 last Thursday, bringing the price back to its prior high of $96 in early Asian hours. Then, after Binance announced that it would offer UST, a stablecoin issued on the Terra network, LUNA climbed past $100. According to data from analytics tool DeFi Llama, the total value locked in DeFi protocols on Terra has surpassed $21 billion, making it the second-largest DeFi ecosystem after Ethereum. From Wednesday's $18 billion level, the amount has increased by about $3 billion.

LUNA's price rise is part of a multi-month surge fueled by November's improvements to its token mechanisms – such as a "burn" feature that reduces supply regularly – and increasing activity on Terra-based DeFi applications. With a market valuation of $36 billion, LUNA has risen to become the ninth-largest cryptocurrency.

The hoopla surrounding DeFi deserves a lot of credit. Terra UST is one of the stable currencies based on the Terra blockchain, along with the Euro (EUT), Canadian Dollar (CAT), and Japanese Yen (JPY). After surpassing DAI, it is currently one of the world's most valued decentralized stablecoins.
<h2>So Why Is Luna Surging? </h2>
Delphi Digital said in a research note published last Monday, “The price increase over the last few days was likely triggered by investors buying spot LUNA to lock up in the Astroport lockdrop, then hedging their position via perpetual futures to remain delta neutral." 

Terra's progress in its burn process could also be a big factor in the price increase. Similar to Ethereum's EIP-1559 upgrade, which introduced the deflationary ETH burn mechanism, proposal 44 launched in October planned to burn 90 million tokens stored in the community pool. This was "one of the largest, if not the largest burns of a significant layer one asset in the crypto market's history," according to Terra's official Twitter account. The goal of burning Luna tokens from the community pool was to increase the asset's scarcity and thus its value.

To provide financial services such as lending, borrowing, and trading, DeFi protocols use smart contracts rather than middlemen. The total value is divided among 13 protocols, averaging approximately $1.6 billion per treatment. On <a href="https://www.cryptoknowmics.com/news/terra-protocol-surpasses-binance-smart-chain/" target="_blank" rel="noopener">Binance Smart Chain</a>, the third-largest DeFi ecosystem, TVL is $17 billion on 232 protocols, with $73 million per protocol. Applications like Anchor, according to some, add to Terra's attraction for investors. In a Telegram message, Marvin Steinberg, the founder of investment firm Steinberg Invest, said:

"A 20% APY [annual percentage yield] on UST deposits through the Anchor Protocol is very appealing because capital flows from price-volatile assets to more risk-averse yield-bearing positions."
<h2>The Bottom Line</h2>
Terra’s LUNA token is the right investment to make now if you are looking for some profitable returns from the crypto space. Terra claims that its usage of fiat-pegged stablecoins distinguishes it from the competition by combining the borderless benefits of cryptocurrencies with the day-to-day price stability of fiat currency. It maintains its one-to-one peg thanks to an algorithm that adjusts stablecoin supply in response to demand.

LUNA Token Was On the Top of Its Game in 2021

Terra's LUNA is one coin that gained significantly in the year 2021. With new projects amd investments pouring upon, LUNA was a winner this year.

Meghna is a graduate of the Indian Institute of Journalism &amp; New Media specializing in  Print Journalism. She is currently working as a content writer for Agio Support Solutions Pvt. Ltd. She aims to provide quality content and strategy in the field of cryptocurrency and work with digital marketing platforms to deliver brand-specific strategies.

LUNA Token Was On the Top of Its Game in 2021

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