The crypto bears have taken over the market and there has been a lot of selling due to FUD. However, the discounted crypto prices present interesting and exciting entry points for investors. Finding a coin that can deliver impressively huge gains has become more difficult now that there is more market participation which means investors have to look deeper to find coins that have a lot of growth potential. Luna, the native cryptocurrency of Terra is currently one of the most promising coins based on the project’s developments. Here are some key things you need to know about Luna and the Terra project.

Terra is a blockchain project developed by Terraform Labs which was founded by Do Kwon and Daniel Shin in January 2018. The blockchain is designed to provide back-end support for various projects developed by the Terra Alliance and Terraform labs.

The Terra mainnet went live in 2019 and it brought with it the KRT stablecoin whose price is pegged to the Korean Won. More than 10 applications use KRT for payment settlement and this includes the CHAI decentralized application which has more than 2 million users and almost 100,000 users every day. Terra introduced its TerraUSD stablecoin, known as UST in 2020. Its demand has rapidly grown due to demand from the Mirror Protocol which facilitates the minting of tokens that mirror the price movement of stocks.

The Mirror protocol makes it easy for people to participate in the stock market without geographical limitations. The synthetic stocks are called M-assets and they require collateralization of UST. Access to the market through this approach requires users to mint UST, a process that requires users to burn Luna. The same process is used to ensure stable prices for the stablecoins minted through Terra by maintaining the right supply of the stablecoins.

Luna is also used to stake on the Terra network. However, the blockchain has low fees which means that the returns are not so attractive. Most of the demand for Luna coin this year was courtesy of demand from the Mirror protocol where M-assets are made. On-chain demand for the ability to make money through the stock market is one of the big demand drivers for the Terra network and a major contributing factor for Luna and UST demand.

Luna’s price action

Luna registered an impressively parabolic performance earlier this year. It traded as low as $0.17 on January 1 this year and peaked at $22.40 on March 21. The latest bear market has slashed some of those gains and it is currently trading at $4.56, which means that it is heavily discounted at the moment.

Although the current price makes it appear concerning, it is a good thing for those that want a more favorable entry point. Selling pressure is currently lower than it was yesterday and if the trend continues, there should be some recovery. Also worth noting is that the current price is approaching a key support line at $4.

Luna lends itself to the list of cryptocurrencies that have compelling use cases and this explains why its price saw impressive gains at a time when the Terra blockchain’s user base grew exponentially. Developments that fuel more demand for the coin will likely contribute to higher price performance. Fortunately, Terra developers are constantly innovating and one of the most anticipated projects is the upcoming Alice Finance although there is not much information on it. The Project Surge initiative which aims to encourage the adoption of UST on more blockchains might also contribute to the demand for Luna needed to maintain the stablecoin.