3 reasons why Terra (LUNA) price hit a new all-time high

3 reasons why Terra (LUNA) price hit a new all-time high


Protocol upgrades are one of the biggest drivers of momentum because they show developers’ dedication to fixing bugs, incorporating user requests and adding new features that make the protocol competitive and shore up the token’s value.

One project that has seen its token price rally to a new all-time high following the launch of a highly anticipated upgrade is Terra (LUNA), a blockchain protocol that uses fiat-pegged stablecoins like TerrUSD (UST) to create a global payments system.

Data from Cointelegraph Markets Pro and TradingView shows that after hitting a low of $23.81 on Sept. 21, the price of LUNA surged 108% to establish a new record high at $49.55 on Oct. 4 as its 24-hour trading volume spiked to $2.5 billion.

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LUNA/USDT 1-day chart. Source: TradingView

Three reasons for the price breakout in LUNA include the launch of its Columbus-5 upgrade which introduced a LUNA burning mechanism, the protocol’s adoption of the IBC standard which opens Terra to the Cosmos ecosystem and an increase in DeFi applications and total value locked on the protocol. 

Columbus-5 arrives

Columbus-5 launched on Sept. 30 and according to Terra developers and independent analysts, the upgrade is the most significant development to happen to the protocol to date.

1/ Columbus-5 is now officially live as the new Terra mainnet!

Welcome to the future of Terra https://t.co/EFnQnFr2lB

— Terra (UST) Powered by LUNA (@terra_money) September 30, 2021

One of the notable changes to come along with the upgrade was a modification to the project’s tokenomic model which leads to all LUNA used to mint UST being burned, instead of going into the community pool.

According to data from Terra, there were $832 million worth of LUNA burned in the genesis block of Columbus-5.

This change has introduced deflationary pressure to the LUNA supply and it could help boost its price in the long term as demand for UST grows.

Inter-Blockchain Communication standard

A second reason for the boost in LUNA’s momentum was its integration with the Inter-Blockchain Communication (IBC) standard which allows the Terra network to communicate and interact with protocols in the Cosmos ecosystem.

This integration opens up Terra and its UST stablecoin to more widespread adoption throughout the Cosmos ecosystem and make it the stablecoin of choice for applications and chains in the network.

With a larger pool of projects now having access to UST, this could lead to a further deflation in the supply of LUNA becaus more will need to be

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