One type of cryptocurrency that is very popular right now is stablecoins, tokens that try to stay at a constant price regardless of the market trades. Although cryptocurrency investments are becoming more mainstream, their inherent volatility has hindered wider adoption in daily life. After all, few people want to be paid in a currency that could drop 10 to 30 percent in a day or two. This is where stable coins come into play.
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There are several ways that stablecoins can keep their prices stable. One way is to tie a coin to a real asset like gold or silver. Another approach is to change the offering of these tokens. The more offer is issued, the more prices fall and vice versa. Both can work and both have their advantages and disadvantages. A stable coin that takes the latter approach is Terra (LUNA). How much more can this cryptocurrency rise if Terra’s market capitalization skyrockets to record highs?
Source: Pixabay
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What is Terra and its LUNA token?
Terra is a blockchain platform supported by its own signature token LUNA. The idea is that the price of Terra Stablecoins will automatically adjust to market demand as needed. By stabilizing prices, Terra Stablecoins could find wider acceptance in mainstream areas. Merchants and payment services could also use Terra. In some parts of the world this has already started. Terra has partnered with CHIA, a South Korean payment portal with more than 2 million users.
In contrast to Terra’s stable coins, LUNA works on a completely different principle. While the prices for a USD Terra Stablecoin are always around 1 USD, the prices for LUNA tokens fluctuate as more people jump onto the platform. Every Terra stable coin can be exchanged for LUNA tokens and sold on the exchanges for a profit. If the prices for a USD stablecoin rise above USD 1, for example, investors can simply cash out their stablecoin for LUNA tokens and sell them with immediate profit. This helps keep Terra tokens at a stable price by “shifting” their volatility to LUNA. In return, LUNA owners receive network transaction fees to offset this increased volatility.
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Source: Terra
LUNA price forecast for 2021
LUNA token prices have skyrocketed in recent months. Since launching in September 2019, LUNA tokens have moved between $ 0.25 and $ 1 per token. As of April, prices rose to $ 16.9 and hit an all-time high of $ 22 on March 21st.
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Source: Coinmarketcap
Stablecoins are very useful in the crypto market. While Terra isn’t the only blockchain project trying to create stable coins, it has definitely grown to be one of the leading players in the region. While the short-term speculative excitement has reached a feverish peak in LUNA, there is still a long-term fall for LUNA and Terra in the crypto ecosystem. Expect prices to continue rising this year, possibly to $ 25 per LUNA token by the end of 2021.
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Source: Binance
Sources of supply for LUNA tokens:
When it comes to altcoins like LUNA, the best place to buy them is at Binance. However, if you live in the US, the US Binance platform doesn’t offer nearly as wide a range of altcoin choices as their primary platform. If you find yourself in this situation, there are other cryptocurrency exchanges that also offer LUNA tokens, such as: B. Bittrex and KuCoin.
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