Luna, the native token of the Terra blockchain, is up over 23% in the last seven days, according to CoinGecko.
Now ranked No. 9 among the top cryptocurrencies by market value, Luna hit an all-time high>What's Terra?
Created by start-up Terraform Labs and its co-founders Do Kwon and Daniel Shin in 2018, the Terra blockchain underpins a decentralized finance (DeFi) ecosystem that creates algorithmic stablecoins. Stablecoins, or cryptocurrencies pegged to reserve assets like the U.S. dollar, are frequently used in DeFi applications like lending or borrowing.
"Terra is the hot dot among the cool kids in crypto right now," Hougan says. "People love the team behind Terra, and they love all the various applications being built>Read more about cryptocurrencies from CNBC Pro
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According to its white paper, Terra operates>What are the risks?
Generally, financial experts warn to>How does it compare to Ethereum?
Due to its stablecoins, Terra is "gearing up to be a serious Ethereum competitor," Hougan says.
Terra has offered incentives to attract investors to its DeFi ecosystem and increase demand for UST. But Terra will need to see "continued user growth and adoption, even after incentives have dried up, to really compete with Ethereum more broadly," he says.
Ethereum is the largest DeFi protocol with over $162 billion in total value locked, according to DeFi Llama. The Terra ecosystem has 13 DeFi protocols built on it, while Ethereum has 373.
It's still "early" for Terra, Hougan says, "but exciting."
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