Terra is currently the second-largest decentralized finance (DeFi) protocol after surpassing the Binance Smart Chain (BSC), according to reports. In addition, its native LUNA token has also risen to a new all-time high of $84.92. This now represents an increment of more than 85% within the past one month.
Terra, which hosts over $18 billion worth of assets across 13 DeFi protocols, overtook BSC in TVL over the weekend. Furthermore, LUNA’s price appreciation and new DeFi protocols pushed Terra’s total value locked to the second spot. It now sits behind only Ethereum for networks with the largest TVL.
One of the likely reasons for LUNA’s surging price could be its diminishing supply on the market. For instance, back in October, the Terra community voted to burn about 10% of the LUNA token supply worth $4 billion. Furthermore, the burn converted the predetermined number of tokens to UST stablecoin – an algorithmic stablecoin.
Besides LUNA’s price appreciation, the liquidity from new protocols is the other prime contributing factor to Terra’s rise. For instance, the inclusion of new decentralized exchange Astroport to Terra, sees more money enter the ecosystem via ‘lockdrop’ feature.
While Terra continues to see a strong climb in TVL, other Layer 1 chains seem to be struggling. Most notable is BSC which is finding it difficult to break past its previous all-time high TVL of $31.6 billion. It achieved this feat earlier in the year in May.
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