UST Becomes the Biggest Decentralized Stablecoin by Market Cap
Today, UST has managed to surpass its rival decentralized stablecoin DAI, which is based on the Ethereum blockchain, and become the biggest stablecoin by market capitalization. It is one of the stablecoins that are part of the Terra project and the ecosystem has experienced significant growth in this year. As a matter of fact, Terra is now on the list of the top ten most valuable crypto projects in the decentralized space and UST has become the largest decentralized stablecoin. Previously, it was the DAI stablecoin that had the highest market capitalization in the market, but the Terra project has experienced significant growth this year.
This has automatically benefitted the UST decentralized stablecoin, which had a market capitalization of $182 million in the beginning of 2021. This December, the stablecoin has reached a valuation of a whopping $9 billion. This has made UST the fourth stablecoin that has the most market capitalization, which puts it behind USDT, USDC and BUSD. However, it is important to note that all three of these are centralized stablecoins that deposit collateral for backing the tokens that are available in the market. In contrast, UST is a decentralized algorithmic stablecoin that balances its peg against the value of the US dollar by using another token known as LUNA, which is also part of the Terra ecosystem.
There has been a growth in market capitalization of other decentralized stablecoins in the last 30 days as well. There are some tokens that have increased their market cap by almost 30%, such as MIM and Frax. As a matter of fact, the latter had even seen a 40% increase in its total market cap. The benefit of these coins is that they are decentralized, which means that they are not dependent on a centralized point of issuance and a central authority cannot block them.
The growth of stablecoins, such as USDT and USDC, has resulted in increased attention from the regulators and some people are of the opinion that there will be additional growth in these alternative stablecoins because users will flock to them for a variety of reasons. But, despite all this growth, the most used stablecoin that can be found on exchanges these days is none other than USDT. Just a day earlier, more than $68 billion worth of the USDT token had changed hands. The price of LUNA, the sibling token of UST, has also surged to all-time high values.
In order to mint the UST stablecoin, those who use the Terra protocol have to burn the LUNA token and this makes this token scarce. There was an increase in the price of LUNA, which had been priced at $0.64 back in January, and has reached $80 today. This is an increase of more than 125x in less than 12 months. The CEO and founder of Terraform Labs, Do Kwon, has said that he will come up with a backup for the token in the form of bitcoin as well as other cryptocurrencies that use the governance method.
