Terra has established itself as one of the most robust blockchains thanks to its extensive infrastructure which supports stablecoins such as UST and Mirror protocol tokens. Those on-chain assets play an essential role in the demand for Terra’s native token, Luna.

The Terra network is slated to continue achieving robust growth in the future especially as it doubles down on the rapidly growing NFT market. However, the network is due for some important upgrades that will allow it to position itself better as the crypto market continues to mature. The Columbus-5 upgrade is one of the highly anticipated improvements initially scheduled to take place on September 9 but Terra announced last week that the upgrade would be delayed for another three weeks.

The Columbus-5 upgrade will therefore happen towards the end of September and it might have a positive impact on the price of Luna. This is because the upgrade will boost staking rewards on the network, increase token burns and pave the way for more protocols in the future. Higher staking rewards will incentivize more participation on the network, thus potentially fueling demand for Luna. The same effect will take place with more burning of the native token, while more network demand will occur as new protocols are introduced into the Luna network.

The above-mentioned activities will all contribute to a higher demand for Luna which is currently trading at $27.10 after tanking by 10.38% in the last 24 hours due to the massive market correction that occurred yesterday. It is also down by 15.92% in the last 7 days.

Source: Binance

The latest dip in Luna’s price mimics the dip in Bitcoin yesterday after it became legal tender in El Salvador. Altcoins including Luna tends to mimic BTC’s price action, thus explaining why it experienced a massive pullback during yesterday’s trading. The RSI is currently in the oversold zone, while the price has so far dipped below its 7-day and 25-day moving average, suggesting that its current price is at a healthy entry point.

Terra’s UST stablecoin might be another overlooked demand driver for the Luna token. The UST token performed exceptionally well during the recent dip. It managed to maintain its peg despite the massive increase in market volatility, proving itself to be a good stablecoin, a favorable achievement especially now that Terra is planning to make it mainstream.

UST is one of the best options during a stablecoin shakedown, which will inevitably take place at some point when regulatory pressure sets in. The stablecoin peg is maintained through a Luna burning mechanism which decreases the supply of Luna when demand increases. This mechanism is enough to influence the price of Luna and is consequently something to look out for when the UST coin goes mainstream and experiences more demand.

The tokenomics are also in favor because Luna has a relatively low circulating supply slightly above 400 million tokens, while its market cap is currently at $11 billion. There is still room for Luna to set new all-time highs if demand for the network increases alongside demand for the native token.