With the market capitalization of the algorithmic stablecoin UST peaking at $ 8.5 billion, what are investors speculating, what drives their adoption, and how does UST outperform its competitors?
Amid the popularity of the DeFi market, the decentralized stablecoin sector continues to grow rapidly.
With its unique utilities, this particular cryptocurrency is undoubtedly an important part of the Terra ecosystem.
The rapidly growing pace of UST adoption has generated a lot of controversy on Twitter, not least as co-founder Kyle Samani of crypto investment firm MultiCoin Capital. ask opinion Followers on what differentiates the Terra decentralized stablecoin from the Synthetix sUSD stablecoin.
Terra’s proprietary stablecoin uses LUNA as a reserve and every time someone mints UST an equivalent amount of USD LUNA is burned.
Terra’s own token LUNA is currently the 10th largest cryptocurrency by market capitalization, despite a sharp drop in price yesterday, having lost more than 8% of its value in 24 hours and almost 3% in a week.
In contrast, the UST’s market capitalization has grown 10.5% in 7 days and 197% in the last month.
chart Upper / lower case USD / USD | Source: CoinMarketCap
While coins combine these two cryptocurrencies into scalable monetary policy, UST is promoting profit-oriented and cross-chain opportunities.
Ryan Watkins discuss:
“However, the advantage of UST that other decentralized stablecoins do not have is that it does not play DAI on its own territory.”
According to researcher Messari, “UST is building its own ecosystem on Terra and actively scaling the multi-chain, rather than trying to challenge DAI on Ethereum.”
So far, Do Kwon has successfully implemented this plan. The co-founder and CEO of Terraform Labs, the Korean company behind the Terra blockchain project, predicted 2 months ago that demand for UST will grow in a cross-chain environment.
In fact, he was not bragging when he said that the market capitalization of its own protocol stablecoin was likely to reach $ 10 billion by the end of the year.
Following a major redesign of the Col-5 network, blockchain development has been undertaken to maximize interconnection and attract multiple projects – all with programs that promote distribution and use.
In the case of sUSD, a synthetic stablecoin on the Synthetix protocol valued in US dollars, adoption has stalled. The market cap has dropped to $ 106 million since August.
sUSD / USD capitalization chart | Source: CoinMarketCap
The protocol management token is SNX, an ERC-20 token with a betting feature that allows synthetic assets (synthesizers) to be released on the Ethereum chain using the Mintr-dapp. SNX’s price has plummeted (44%) over the month and is up just over 15% over the past year.
In fact, sUSD is now over-secured with SNX. It came into play amid growing demand for decentralized stablecoins, but not enough to grab the attention of investors as UST did. Participants who responded to Samani’s question identified a number of concerns.
Comparing it with STU, they I guess I think sUSD cannot compete with lower margins due to higher gas prices.
Chief Investment Officer Galaxy Digital Arguments:
“The second important point is that a very large activation energy is required. This applies to UST, but not to sUSD. “