LUNA, the native token of decentralized payments network Terra, bumped to over $100 in European hours on Friday to lead a “Santa rally” in crypto markets.
Traders took advance of Thursday’s 10% decline to $85 to bring LUNA back to its previous high of $96 in early Asian hours. Then an announcement by crypto exchange Binance that it will list UST, a stablecoin issued on the Terra network, pushed LUNA above $100. The price met resistance at that level and was down 5 cents at press time.
Rising prices caused the total value locked (TVL) in decentralized finance (DeFi) protocols on Terra to cross the $21 billion mark, data from analytics tool DeFi Llama showed, making it the largest DeFi ecosystem after Ethereum. The figure has grown by almost $3 billion from Wednesday’s $18 billion level.
Of the total, over $9 billion is locked on Anchor, a stablecoin-based yield-generating application. For TerraSwap, a decentralized exchange built with Terra smart contracts, TVL jumped 81% to over $2 billion compared to last week.
DeFi protocols rely on smart contracts instead of middlemen to provide financial services such as lending, borrowing, and trading.
The value is split among 13 protocols, or over $1.6 billion per protocol on average. That compares with $73 million per protocol on Binance Smart Chain, the third-largest DeFi ecosystem, which has $17 billion locked on 232 protocols.
Some say applications like Anchor add to Terra’s allure for investors.
“A 20% APY [annual percentage yield] on UST deposits through the Anchor Protocol is very appealing because capital flows from price-volatile assets to more risk-averse yield-bearing positions,” Marvin Steinberg, the founder of investment firm Steinberg Invest, said in a Telegram message with CoinDesk.
LUNA’s price increase is part of a broader multimonth rally, one buoyed by November′s changes to its token mechanisms – such as a ”burn” feature that periodically decreases supply – and increased activity on DeFi applications built on Terra. That’s propelled LUNA to become the ninth-largest cryptocurrency, with a market capitalization of $36 billion.