Protocol upgrades are one of the biggest drivers of the momentum as they show the developers commitment to fixing bugs, accommodating user requests, and adding new features that make the protocol competitive and buttress the value of the token.
One project where token price has soared to a new all-time high following the introduction of a highly anticipated upgrade is Terra (LUNA), a blockchain protocol that uses fiat-linked stablecoins like TerrUSD (UST) to create a global To create payment system.
Data from Cointelegraph Markets Pro and TradingView show that after hitting a low of $ 23.81 on September 21, the price of LUNA rose 108% to hit a new record high of $ 49.55 on October 4 while its 24-hour trading volume rose to $ 2.5 billion.
Three reasons for the price breakout at LUNA are the introduction of the Columbus 5 upgrade, which introduced a LUNA burning mechanism, the adoption of the IBC standard by the protocol that opens Terra to the Cosmos ecosystem, and an increase in DeFi applications and the total value given to the log.
Columbus-5 was launched on September 30th and is the most significant development of the protocol to date, according to Terra developers and independent analysts.
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 that came with the upgrade was a change to the project’s tokenomic model that resulted in all LUNAs used to mint USTs being burned instead of going to the communal pool.
According to Terra, $ 832 million worth of LUNA was burned in the Genesis block of Columbus-5.
This change has put deflationary pressure on LUNA supply and could help increase the price in the long run as demand for UST grows.
Inter-blockchain communication standard
A second reason for LUNA’s dynamism was its integration with the Inter-Blockchain Communication (IBC) standard, which enables the Terra network to communicate and interact with protocols in the Cosmos ecosystem.
This integration opens up a wider acceptance for Terra and its UST stablecoin in the entire Cosmos ecosystem and makes it the stablecoin of choice for applications and chains in the network.
Since a larger pool of projects now has access to UST, this could lead to further deflation of the LUNA supply, as more must be burned when new UST is minted.
Related: Evolve or die: How smart contracts are changing the power balance of the crypto sector
The total value of the terra ecosystem increases sharply
A third reason for the bullish price movements at LUNA was the growing ecosystem of the network of decentralized financial protocols (DeFi), which helped lift the overall value of the protocol to a new all-time high.
According to Defi Llama, the total value of assets locked on the Terra network hit a record $ 10.07 billion on October 4 when LUNA price hit a new record high.
Currently, Terra’s TVL is over $ 10 billion and the leading platform in terms of TVL is the Ancor Protocol (ANC) at $ 3.86 billion. ANC is the primary route for UST coinage by pledging LUNA or Ether (ETH) as collateral.
Other notable DeFi protocols on the network are Lido (LDO) with a TVL of $ 3 billion, Mirror (MIR) with a TVL of $ 1.38 billion, and Terraswap with a TVL of $ 1.32 billion .
Cointelegraph Markets Pro’s VORTECS ™ data began to see a bullish outlook for LUNA on September 26, ahead of the recent price hike.
The VORTECS ™ Score, exclusive to Cointelegraph, is an algorithmic comparison of historical and current market conditions derived from a combination of data points such as market sentiment, trading volume, recent price movements and Twitter activity.
As can be seen in the graph above, the VORTECS ™ Score for LUNA began to rise on September 21st, hitting a high of 73 about an hour before the price began rising 108% over the next two weeks.
The views and opinions expressed are those of the author only and do not necessarily reflect the views of Cointelegraph.com. Every step of investing and trading involves risk, so you should do your own research when making a decision.