3 reasons why the price of Terra (LUNA) has reached an all-time high

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Protocol upgrades are one of the biggest drivers of momentum as they demonstrate the developers’ dedication to bug fixing, integrating user requests and adding new features that make the protocol competitive and support the value of the token.

One of the projects that has seen the price of the token soar to an all-time high after launching a highly anticipated upgrade is Terra (LUNA), a blockchain protocol that uses stablecoins pegged to fiat currencies 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 September 21, LUNA surged 108% to hit a new record high of $49.55 on October 4 as 24-hour trading volume rose to $2.5 billion. .

LUNA/USDT 1-day chart. Source: TradingView

Three reasons for the price hack in LUNA include the launch of the Columbus Update 5 that introduced the LUNA burning mechanism, the protocol adoption of the IBC standard that unlocks Terra on the Cosmos ecosystem, an increase in DeFi applications, and the total value locked to the protocol.

Arrival of Columbus -5

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

One notable change that came along with the upgrade was a modification of the project’s symbolic model which resulted in all LUNA instrumentation used to instrument the ground tanks being burned, rather than going into the community pool.

according to data From Terra, an $832 million LUNA was burned in the Columbus 5 configuration block.

This change introduced deflationary pressures on the supply of the LUNA and could help boost its price in the long run as demand for floor tanks grows.

The Standard for Inter-Blockchain Communication

The second reason for LUNA’s increased momentum is its integration with the Inter-Blockchain Communication (IBC) standard that allows the Terra network to communicate and interact with protocols in the Cosmos ecosystem.

This integration opens Terra and UST’s stablecoins to widespread adoption across the Cosmos ecosystem and makes them the stablecoin of choice for applications and chains in the network.

With a larger group of projects now having access to ground tanks, this could lead to a further contraction in the supply of LUNA as more projects have to be burned in the minting of new ground tanks.

Related: Evolution or Die: How Smart Contracts Are Changing the Balance of Power in the Crypto Industry

The total value booked in the Terra ecosystem is on the rise

The third reason for LUNA’s upward price movement is the network’s growing ecosystem of Decentralized Finance (DeFi) protocols that have helped push the total value of the protocol to a new all-time high.

According to data from Defi Llama, the total value of locked assets on the Terra network reached a record high of $10.07 billion on October 4, as the price of LUNA soared to a new record high.

Total value insured on Terra. Source: Devi Lama

Currently, Terra’s TVL is worth over $10 billion, and the highest-rated platform for TVL is Ancor Protocol (ANC) with a value of $3.86 billion. ANC is the primary method of minting terrestrial reservoirs by pledging LUNA or Ether (ETH) as collateral.

Other notable DeFi protocols on the network include Lido (LDO), which has a TVL value of $3 billion, Mirror (MIR) with a TVL value of $1.38 billion, and Terraswap which has a value of $1.32 billion.

VORTECS™ data from Cointelegraph Markets Pro began detecting a bullish outlook for LUNA on September 26, ahead of the recent price rally.

The VORTECS™ score, exclusive to Cointelegraph, is an algorithmic comparison of historical and current market conditions drawn from a range of data points including market sentiment, trading volume, recent price movements and Twitter activity.

VORTECS™ Score (in green) vs. LUNA price. Source: Cointelegraph Markets Pro

As shown in the chart above, the VORTECS™ result for LUNA started rising on September 21 and reached 73 pips about one hour before the price started rising 108% over the next two weeks.

The opinions and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should do your own research when making a decision.