Recently, CNBC’s âMake Itâ looked at the risks of investing in $ LUNA, the âhotâ token that âcool kidsâ love to invest in.
$ LUNA is the native token of the stablecoin algorithmic platform Earth.
According to Binance Research, Terra is a Proof of Stake (PoS) blockchain. They also say that $ LUNA is “used in the issuance of stable coins (TerraSDR), as a mechanism for price stability, as well as for staking and governance of networks.
Work on Terra, which was developed by South Korean blockchain company Terraform Labs (founded in January 2018 by Daniel Shin and Do Kwon), began in January 2018, and mainnet Terra spear April 23, 2019.
According to CNBC item, which was released on December 27, 2021, although $ LUNA started 2021 at less than $ 1, it was trading around $ 97 at the time of writing.
Matt Hougan, chief investment officer at Bitwise Asset Management, told the Make It team:
“He’s been on an absolutely spectacular race. It has been largely impervious to recent market volatility, falling less and recovering faster than its peers.“
“Terra is the hotspot among cool crypto kids right now, âHougan says. âPeople love the team behind Terra, and they love all the different apps that are built there right now.“
The article also pointed out that last month Terra “became the second largest DeFi protocol behind Ethereum, according to data provider DeFi Llama.
CNBC says that although $ LUNA holders are “given governance rights and voting power for the protocol,” investors “should understand that Luna is also used to regulate Terra’s stable pegs,” which, according to Hougan, means that $ LUNA is “at the center of the shock absorption process if something is wrong with the stablecoins on the Terra platform.
Although in general investing in cryptocurrencies is risky, according to Hougan, in the case of $ LUNA, “the greatest risk” is that “investors could suffer losses if the Terra stablecoins are not in able to hold their ankles “. He also mentioned that $ LUNA “acts as a kind of volatility absorption mechanism for Terra Stables, so Luna’s performance can match that of Terra Stables.”
The CNBC article went on to say that although “Terra’s stablecoins, including the dollar-indexed UST, are performing well now,” it is not possible to “predict the future performance of an asset. and whether it will be able to withstand high volatility or a market bear, âand then there’s the regulatory risk.
CNBC says the United States Securities and Exchange Commission (SEC) is “currently investigating Terraform to see if it sells unregistered titles âand that this subpoena isâ related to Terraform’s Mirror protocol, which offers synthetic versions of actions, and not to the Terra protocol itself â.
$ LUNA is currently the ninth most valuable crypto-asset with a reported market cap of around $ 32.6 billion.
According to data from TradingView, on Binance, currently (at 8:30 p.m. UTC on January 1), $ LUNA is trading around $ 90.06, up 4.99% (vs USD) in the past 24 hours.
The views and opinions expressed by the author, or anyone mentioned in this article, are for informational purposes only and do not constitute financial, investment or other advice. Investing in or trading cryptoassets carries the risk of financial loss.