UST, one of the stablecoins derived from the Terra project, has become the most valuable project of its kind by market cap, taking the spot that DAI, another decentralized stablecoin, once held. This closes a year of growth for the Terra ecosystem and for UST, which managed to swell from a market capitalization of $182 million at the start of 2021 to more than $9 billion this December.
UST is the fourth-largest stablecoin in market cap.
Now, UST cements its new position as the fourth stablecoin with the most market cap, behind USDT, USDC, and BUSD, all centralized stablecoins. While these work by depositing collateral to back the tokens in the market, UST is an algorithmic stablecoin that uses another token of the Terra ecosystem (LUNA) to balance its peg against the U.S. dollar’s value. In the last month, other decentralized stablecoins have also grown in terms of market cap. Tokens like Frax and MIM have gained more than 30%, with FRAX even reaching a 40% in terms of market cap.
Regulators are turning their attention to stablecoins.
As reported earlier, due to the heightened attention that the rise of stablecoins like USDT and USDC are facing from regulators, some believe these alternative stablecoins will experience further growth, with users flocking to these alternatives for a number of reasons. But even with all this growth, USDT is still the most used stablecoin on exchanges, with more than $68 billion worth of the token changing hands yesterday. The rise of UST has also propelled the price of LUNA, its sibling token, to an all-time high. To mint UST, users in the Terra protocol need to burn LUNA, and this makes the token more scarce.