In this new series, we compare some key crypto assets and how they have fared recently. While doing so, we ask this question - if an investor has Rs.1,000 to spare today, how can he/she allocate the capital between these assets? Today, we aim to compare Terra (LUNA) and NEAR Protocol (NEAR). Both are layer 1 blockchains that are focussing on building algorithmic stablecoins.
Terra is a public blockchain protocol that utilizes a suite of algorithmic decentralized stablecoins to support a thriving ecosystem that brings DeFi to the masses. Stablecoins are cryptocurrencies that are linked to fiat asset, such as the US dollar. These are widely used in DeFi applications such as lending and borrowing. The Terra network's native tokens are Luna (LUNA) and TerraUSD (UST).
Terra uses LUNA to keep stablecoin prices stable. When the stablecoin supply needs to be increased or decreased, Terra incentivizes arbitrage trading between LUNA and stablecoins. Terra operates on a Proof-of-Stake model. In this model, validators verify transactions based on the number of coins they own. Validators and delegators can also stake LUNA to earn rewards.
In recent months, the wide adoption of UST has meant that LUNAâ€™s circulating supply has reduced significantly resulting in a positive price action even when the overall market has been bearish.
LUNA has a market capitalization of $30.7 billion today and is among the top 10 cryptocurrencies.
NEAR Protocol (NEAR)
NEAR Protocol is a layer-1 blockchain that achieves scalability through the use of Nightshade, a proprietary sharding technology. NEAR also provides cross-chain interoperability - users can connect ERC-20 tokens and assets from the Ethereum blockchain to the NEAR Protocol network. This allows them to gain access to increased throughput and lower transaction fees.
The NEAR token is the native cryptocurrency of the NEAR protocol. It is primarily used to pay transaction fees and as collateral for blockchain data storage and uses a Proof of Stake (PoS) consensus. This week, the NEAR ecosystem launched USN, an algorithmic stablecoin that is backed by NEAR similar to the LUNA and UST combo. In anticipation of the launch, NEAR had a good rally in March though it is now pulled down by wider market pressures.
With a market capitalization of $8.7 billion, NEAR is among the top 20 cryptocurrencies.
LUNA V/S NEAR â€“ The verdict
Both LUNA and NEAR are among the top-performing cryptocurrencies in recent times. Terra aims to provide programmable money that is simple to spend, with low fees, instant settlements, and cross-border transaction utility. By investing in a treasury of Bitcoin purchases, it has championed the model of building algorithmic stablecoins fundamentally backed by crypto assets. UST is now the third largest stablecoin by market cap and is gaining wide adoption while bringing trade volumes to its blockchain.
NEAR Protocol's goal is to create a platform that is both developer and user-friendly. To support this mission, NEAR has implemented multiple features and is aiming at a comprehensive suite of products. One such is the development of USN, that it believes, will drive more value to the ecosystem and push NEARâ€™s price in future.
Recent performances of LUNA and NEAR v/s ETH
Source: TradingView, Binance
In 2022, LUNA has overperformed ETH by a larger margin, gaining 30% in value compared to 12% as that of NEAR.
With regular updates on their respective platforms, both coins have so far shown the potential to emerge as good investment options in the future. We believe that NEAR has more room to grow in future given that LUNA has already surged in 2022. We suggest a 60% share in NEAR and the remaining 40% to LUNA.
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Disclaimer: This article was authored by Giottus Crypto Exchange as a part of a paid partnership with The News Minute. Crypto-asset or cryptocurrency investments are subject to market risks such as volatility and have no guaranteed returns. Please do your own research before investing and seek independent legal/financial advice if you are unsure about the investments.