{"id":238,"date":"2021-12-10T23:52:54","date_gmt":"2021-12-10T23:52:54","guid":{"rendered":"http:\/\/www.cryptoheretostay.com\/?p=238"},"modified":"2021-12-10T23:52:55","modified_gmt":"2021-12-10T23:52:55","slug":"prominent-investor-speculates-why-terras-algo-stablecoin-ust-triumphed-over-synthetix-susd","status":"publish","type":"post","link":"https:\/\/cryptoheretostay.com\/?p=238","title":{"rendered":"Prominent investor speculates why Terra\u2019s algo-stablecoin (UST) triumphed over Synthetix (sUSD)"},"content":{"rendered":"<p> <script type=\"text\/javascript\">\r\namzn_assoc_placement = \"adunit0\";\r\namzn_assoc_tracking_id = \"totafreearti-20\";\r\namzn_assoc_ad_mode = \"search\";\r\namzn_assoc_ad_type = \"smart\";\r\namzn_assoc_marketplace = \"amazon\";\r\namzn_assoc_region = \"US\";\r\namzn_assoc_default_search_phrase = \"crypto\";\r\namzn_assoc_default_category = \"All\";\r\namzn_assoc_search_bar = \"false\";\r\namzn_assoc_title = \"\";\r\namzn_assoc_rows =\"1\";\r\n<\/script>\r\n<script src=\"\/\/z-na.amazon-adsystem.com\/widgets\/onejs?MarketPlace=US\"><\/script><br \/>\n <\/p>\n<p>As the market capitalization of Terra\u2019s algorithmic stablecoin that tracks the value of the US dollar topped $8.5 billion\u2013investors speculate what is driving the adoption and how exactly did UST manage to leave the competition lagging so far behind?<\/p>\n<p>While fueling the DeFi market, the decentralized stablecoin sector continues to rapidly grow.<\/p>\n<p>By leveraging unparalleled usage, this particular breed of crypto surfaced as an unarguably vital part of the ecosystem.<\/p>\n<h2>Adoption<\/h2>\n<p>The blazing adoption rate of UST has spurred the debate on Twitter, as Kyle Samani, co-founder of crypto investment firm MultiCoin Capital, asked his followers\u2019 for their opinion on what sets Terra\u2019s decentralized stablecoin apart from its peers\u2013Synthetix\u2019s stablecoin sUSD in particular.<\/p>\n<p lang=\"en\" dir=\"ltr\">What\u2019s your best theory on why sUSD didn\u2019t take off, where UST did?<\/p>\n<p>\u2014 ksam.sol (@KyleSamani) December 8, 2021<\/p>\n<p>Terra\u2019s native stablecoin uses LUNA as a reserve asset, and every time someone mints UST, a dollar-equivalent amount of LUNA is burned.<\/p>\n<p>Terra\u2019s native token LUNA rose to the top 10 of cryptos, rallying more than 8% during the past seven-day period\u2013despite the market pullback.<\/p>\n<p>The UST market cap, which increased 10.5% during the same time frame, grew 197% during the past month, according to CoinMarketCap.<\/p>\n<\/p>\n<p>While the mint\u2013burn mechanism is tying the two cryptocurrencies in a scalable monetary policy, UST leverages yield-bearing and interchain capabilities.<\/p>\n<h2>Utility<\/h2>\n<p>\u201cHowever, what UST has in its favor that other decentralized stablecoins do not have is that its not playing DAI on its home turf\u201d\u2013argued Ryan Watkins.<\/p>\n<p lang=\"en\" dir=\"ltr\">However, what UST has in its favor that other decentralized stablecoins do not have is that its not playing DAI on its home turf.<\/p>\n<p>Instead of attempting to challenge DAI on Ethereum, UST is building it\u2019s own ecosystem on Terra and aggressively expanding multichain.<\/p>\n<p>\u2014 Ryan Watkins (@RyanWatkins_) September 15, 2021<\/p>\n<p>According to the Messari\u2019s researcher, \u201cinstead of attempting to challenge DAI on Ethereum, UST is building its own ecosystem on Terra and aggressively expanding multichain.\u201d<\/p>\n<p>That was the plan and, thus far, Do Kwon executed without a hiccup\u2013 the co-founder and CEO of Terraform Labs, the South Korean company behind the blockchain project Terra, predicted two months ago that the demand for UST in cross-chain environments would accelerate at this rate.<\/p>\n<p>He didn\u2019t over-exaggerate when saying that the protocol\u2019s native stablecoin could potentially reach the $10 billion market cap mark by this year\u2019s end.<\/p>\n<p>Following the network\u2019s cardinal Col-5 upgrade, the blockchain\u2019s development was stirred towards maximizing the cross-chain interoperability, as well as attracting an army of projects\u2013all with the agenda of boosting UST usage and adoption.<\/p>\n<p lang=\"en\" dir=\"ltr\">Osmosis is the third largest exchange (both CEX and DEX) for $UST by volume.<\/p>\n<p>The \ud83c\udf0a is just beginning\u2026 https:\/\/t.co\/7z9JJCEYvf<\/p>\n<p>\u2014 Osmosis (@osmosiszone) December 8, 2021<\/p>\n<h2>Competition<\/h2>\n<p>In the case of sUSD\u2013a synthetic stablecoin on the Synthetix protocol that tracks the value of the US dollar\u2013the adoption stalled. It\u2019s market cap, currently at $142 million, has been in decline since August, according to CoinMarketCap.<\/p>\n<\/p>\n<p>The protocol\u2019s governance token, SNX, is an ERC-20 token, whose staking enables the issuance of synthetic assets, or Synths, on the Ethereum chain\u2013by using the Mintr dapp.<\/p>\n<p>Although the price of SNX rose 109% during the past year, the protocol\u2019s governance token recorded a 19% drop in value during the past month.<\/p>\n<p>The fact that sUSD, which is over collateralized by SNX, stepped to the scene when the demand for decentralized stablecoins was on the rise, wasn\u2019t enough to grab the attention of investors, like UST did. Those chiming in to answer Samani\u2019s question pointed out a few facts.<\/p>\n<p>In comparison to UST, they argued, sUSD just doesn\u2019t compete\u2013being a more gas invasive option that promises a smaller yield.<\/p>\n<p lang=\"en\" dir=\"ltr\">capital efficiency of collateral, good yield for UST, cheap tx fees<\/p>\n<p>\u2014 Jason Choi (@mrjasonchoi) December 9, 2021<\/p>\n<p>\u201cSecond and more important is the activation energy required is immense. It was applied behind UST, but not in the case of sUSD,\u201d argued Jon Kol, Director at Galaxy Digital\u2019s Principal Investment group.<\/p>\n<p lang=\"en\" dir=\"ltr\">Two reasons, first, try minting one vs the other.<\/p>\n<p>Second and more important is the activation energy required is immense. It was applied behind UST, but not in the case of sUSD.<\/p>\n<p>\u2014 Jon Kol (\ud83c\udff4\u200d\u2620\ufe0f,\ud83c\udff4\u200d\u2620\ufe0f) (@thePalenimbus) December 9, 2021<\/p>\n<p><h2>CryptoSlate Newsletter<\/h2>\n<\/p>\n<p>Featuring a summary of the most important daily stories in the world of crypto, DeFi, NFTs and more.<\/p>\n<h2>Get an edge on the cryptoasset market<\/h2>\n<p>Access more crypto insights and context in every article as a paid member of CryptoSlate Edge.<\/p>\n<p>  <strong>On-chain analysis<\/strong><\/p>\n<p>  <strong>Price snapshots<\/strong><\/p>\n<p>  <strong>More context<\/strong><\/p>\n<p> Join now for $19\/month Explore all benefits<br \/>\n<br \/><script type=\"text\/javascript\">\r\namzn_assoc_placement = \"adunit0\";\r\namzn_assoc_tracking_id = \"totafreearti-20\";\r\namzn_assoc_ad_mode = \"search\";\r\namzn_assoc_ad_type = \"smart\";\r\namzn_assoc_marketplace = \"amazon\";\r\namzn_assoc_region = \"US\";\r\namzn_assoc_default_search_phrase = \"bitcoin\";\r\namzn_assoc_default_category = \"All\";\r\namzn_assoc_search_bar = \"false\";\r\namzn_assoc_title = \"\";\r\namzn_assoc_rows =\"1\";\r\n<\/script>\r\n<script src=\"\/\/z-na.amazon-adsystem.com\/widgets\/onejs?MarketPlace=US\"><\/script><br \/>\n<br \/><a href=\"https:\/\/cryptoslate.com\/prominent-crypto-investor-speculates-why-terras-stablecoin-ust-triumphed-over-synthetix-susd\/\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>As the market capitalization of Terra\u2019s algorithmic stablecoin that tracks the value of the US dollar topped $8.5 billion\u2013investors speculate what is driving the adoption and how exactly did UST manage to leave the competition lagging so far behind? While fueling the DeFi market, the decentralized stablecoin sector continues to rapidly grow. By leveraging unparalleled [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":239,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_wp_rev_ctl_limit":""},"categories":[3],"tags":[],"class_list":["post-238","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-ethereum-news"],"_links":{"self":[{"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=\/wp\/v2\/posts\/238","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=238"}],"version-history":[{"count":1,"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=\/wp\/v2\/posts\/238\/revisions"}],"predecessor-version":[{"id":240,"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=\/wp\/v2\/posts\/238\/revisions\/240"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=\/wp\/v2\/media\/239"}],"wp:attachment":[{"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=238"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=238"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/cryptoheretostay.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=238"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}