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 on Sunday of over $103 and is currently trading at around $97. Luna started the year priced below $1.
“It has been on an absolutely spectacular run,” Matt Hougan, chief investment officer at Bitwise Asset Management, tells CNBC Make It. “It’s been largely impervious to the recent market volatility, falling less and recovering faster than its peers.”
Despite the hype around Terra and its token Luna, it’s important to research and understand the risks before investing since financial experts view cryptocurrencies as volatile, speculative investments. As quickly as one reaches a new high, it could go back down.
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 on it right now.”
With nearly $18 billion in total value locked, Terra recently became the second-largest DeFi protocol behind Ethereum, according to data…