LeoFinance - Terra Network A Good Investment?

Honestly when I heard about earning passive income at +20% on stable coins and +10% on ETH I was not a believer. I had been ignoring Terra network for pretty much all of this year.

In a year Terra's native token Luna has gone from under a $1 up to all time high of over $100. There has to be a reason for such price appreciation and I looked into the project again? This time I became a believe and I will list out some reasons why Luna and Terra Protocols are good investments.

Potential Terra Protocols

The primary evidence that has me bullish on Terra is its potential growth. Currently its total locked value in all of its protocols is a whopping $21 billion and growing. While Ethereum is at $161 billion. Terra at the end of this year is second to Ethereum so the gap is still quite wide between 1st and 2nd.

The Terra chain compared to all the other chains is already ranked second in total value locked (TVL). With Ethererum market cap near $490 million for a TVL at $161 billion if we had the same ratio for Terra than Luna is approximately $290 million for TVL at 161 billion. Yet Luna market cap is currently at $36 million.

Even if Luna is not going to grow in price at the same rate as Ethereum the potential growth is very feasible. Currently only 13 protocols account for all of Terra's TVL. While all other top 5 crypto chains have at least 3 times as much and some even more. Ethereum has 373 protocols locking up its assets. Just with that stats one can think just how much bigger Terra could be if more protocols come online.

The whole jest of mentioning this is that there appears to be a potentially more activity to come with the use of Terra Network.

Stable Coin

Without going into deep with what the Terra Network it is still useful to briefly look at its core protocol.

With the heavy interest in crypto space investments are flooding in. With that comes people who want to borrow and lend. Anchor protocol is one such protocol that provides liquidity through the use of borrowing and lending. Anchor aims to provide lenders close to 20% APR interest while borrowers provide collateral that allows Anchor to produce the 20% APR. There are more mechanics involved but that is the jest of how Anchor protocol operates.

The Anchor protocol borrows and lends a native stable coin known as UST, or Terra USD. The APR payouts and lending are in USTs on Anchor Protocol. Therefore users who invest in Anchor are earning stable coins for their investments.

Since April 2021 Anchor Protocol has risen in TVL from $500 million to over $11.1 billion and growing at much faster rates. The 20% APR is still available and no signs for it to drop significantly.

Conclusions

If crypto investors are looking for a stable coin to hold they may likely be investing in UST. The % APR provided by Anchor Protocol is one of the highest and proven since its inception for almost a year now.

In addition the whole Terra Network when it comes to active projects is much less than many of its competitors. Yet Terra is able to garner a lot more money per protocol then the others. It shows just how much better demand the platform has compared to other chains.

One last element to bring up is that many of the Terra protocols are built around the use of Anchor Protocol in some way to garner their own earings. This is interesting because many of the protocols on the network can then provide interest earned on its platform to compete making it all around a stronger network. For instance Nexus Protocol has a liquidity pool for ETH holders to stake and earn 10% interest. The best part of it is the 10% are paid in the form of ETH and not some obscure or propriety token. I will discuss more on the Nexus Protocol in future posts.

None of what I write is financial advice. It is for entertainment purposes only. Thanks for reading!