The cryptocurrency economy has soared in recent years, creating much wealth in the process. In fact, CoinMarketCap.com currently lists over 9,200 different cryptos, which are worth $1.75 trillion collectively. But with so many different options, it can be a little difficult to choose worthwhile investments, especially with meme coins dominating the news.
On that note, Shiba Inu rose to prominence in 2021, generating returns of around 42,000,000%. And now that the meme coin is down 75% from its peak, many traders are hoping for a great performance in 2022. Some are even expecting the price to reach $1 in the future. Unfortunately, that is literally impossible.
More importantly, SHIB’s large sell-off does not imply a rebound that is as equally impressive. What matters now is what kind of returns the coin can produce in the coming years. To that end, several cryptos seem like better investments. Here is one example.
The case for Terra
Terra (CRYPTO:LUNA) is blockchain that is programmable and powered by two different coins. First, TerraUSD is a stablecoin that keeps track of the United States dollar. The Terra stablecoin is also able to be tied to other various currencies. Second is LUNA, a crypto that absorbs the volatility, helping to keep each stablecoin at the target value. For instance, if increasing demand drives TerraUSD over $1, the network will incentivize coin holders to trade LUNA in for TerraUSD, thereby raising the supply and lowering its price. The system also works the same in reverse.
Also noteworthy, Terra is created on the Cosmos framework, which is powered by the Tendermint protocol, which is a high-throughput POS consensus mechanism. To that end, Terra is able to scale to 10,000 transactions per sec (TPS) while finalizing transactions in only two seconds. By comparison, ETH handles up to 30 TPS and needs at least one min to finalize its transactions. That poor throughput has made fees on the network increase sharply in recent years.
Terra’s throughput has made it more popular with the decentralized finance (DeFi) traders. In fact, Terra is the second-biggest DeFi ecosystem (behind ETH), with $15.9 billion being invested on the blockchain. Of course, Terra has a number of great products.
DeFi products like PaywithTerra and Anchor have created demand for Terra stablecoins, which mean higher demand for LUNA, because the network has incentivized token holders to convert their LUNA to Terra to maintain stablecoin value. And that demand will drive LUNA’s price even higher. As the developer team has put it: The more Terra is used, the more that LUNA is worth. That is why this crypto seems like it is a much smarter investment than Shiba Inu.
Comments are closed.