With the algorithmic stablecoin UST’s market cap peaking at $ 8.5 billion, what are investors speculating, driving adoption, and how does UST outperform its competitors?

Amid the popularity of the DeFi market, the decentralized stablecoin sector continues to grow rapidly.

With its unique utilities, this particular cryptocurrency is proving to be an undeniably important part of the Terra ecosystem.

Assume

The rapidly increasing rate of UST adoption has fueled much debate on Twitter, not least as co-founder Kyle Samani of crypto-investment firm MultiCoin Capital ask for opinion Followers on what makes Terra’s decentralized stablecoin different from Synthetix’s sUSD stablecoin.

Terra’s native stablecoin uses LUNA as a reserve, and every time someone mints UST, an equivalent amount of LUNA in US dollars is burned.

Terra’s native token LUNA is currently the 10th largest cryptocurrency by market capitalization despite its steep drop in price yesterday, losing more than 8% of its value in 24 hours and almost 3% in the week.

In contrast, UST’s market capitalization is up 10.5% in 7 days and up 197% in the last month.

diagram Upper / lower case of USD / USD | Source: CoinMarketCap

While coinage integrates these two cryptocurrencies into a scalable monetary policy, UST promotes profit-oriented and cross-chain opportunities.

Utilities

Ryan Watkins to discuss:

“The advantage of the UST that other decentralized stablecoins do not have, however, is that it does not play DAI on its own territory.”

According to the Messari researcher, “UST is building its own ecosystem on Terra and actively scaling multi-chain rather than trying to challenge DAI on Ethereum.”

So far, Do Kwon has implemented this plan without any problems. The co-founder and CEO of Terraform Labs, the Korean company behind the Terra blockchain project, predicted 2 months ago that the demand for USTs will accelerate in a cross-chain environment.

In fact, he didn’t brag when he said the protocol’s native stablecoin is likely to hit $ 10 billion in market cap by the end of the year.

After the major upgrade of Col-5 of the network, blockchain development was carried out to maximize cross-chain interoperability and attract multiple projects – all with programs to promote uptake and use.

OLDcompetition

In the case of sUSD, a synthetic stablecoin on the Synthetix protocol valued at US dollars, adoption has stalled. Market capitalization has dropped to just $ 106 million since August.

diagram capitalization sUSD / USD | Source: CoinMarketCap

The protocol’s governance token is SNX, an ERC-20 token, with a staking function that enables the issuance of synthetic assets (synths) in the Ethereum chain using the Mintr-dapp. The price of SNX fell sharply (44%) for the month and rose a little more than 15% over the past year.

In fact, sUSD is now over-secured with SNX. It came into play amid the growing demand for decentralized stablecoins, but not enough to grab investor attention, as the UST did. Participants who responded to Samani’s question pointed out a number of problems.

After comparing it with UST, they suppose i think sUSD cannot compete at lower margins due to higher gas charges.

Director of Galaxy Digital’s major investment Arguments:

“The second important point is that the activation energy required is very large. It applies according to the UST, but not in the case of sUSD. ”

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