Yesterday Bitcoin hit an all-time-high of $61,556 but has hovered around $60,000 for most of the day.
Meanwhile, one of the hottest crypto-assets over the last month or so has been Terra’s Luna. Today it has been trading around $16, which is up 167% since the beginning of March. According to CoinMarketCap, Terra is a blockchain protocol that uses fiat-pegged stablecoins to power price-stable global payments systems. According to its white paper, Terra combines the price stability and wide adoption of fiat currencies with the censorship-resistance of Bitcoin and offers fast and affordable settlements. This article presents an overview of what is Terra and its Luna is and where it’s heading.
The imminent launch of Anchor, a savings protocol on the Terra blockchain, may be behind the excitement around Terra. Anchor will offer a principal-protected stablecoin savings product that accepts TerraUSD (UST) deposits and pays a stable interest rate. To generate yield, Anchor lends out deposits to borrowers who put down liquid-staked proof-of-stake (PoS) assets from major blockchains as collateral. Anchor’s yield is thus powered by block rewards of major PoS blockchains.
* The views expressed herein are those of the author and should not be attributed to the International Monetary Fund, its Executive Board or its management.