Is Terra Luna A Better Investment Than Solana?

While both are good investments, LUNA has better odds in the long-run

Last Updated February 14th 2022

5 Min Read

Both Terra (LUNA) and Solana (SOL) are good crypto assets to invest. They both recorded thousands of percentages in gains last year. In another bull cycle, both of them could rally again. However, if you want to maximize your returns by going big on one of them, then Terra (Luna) is a better investment than Solana.

Several factors support Terra’s prospects when compared to Solana. The most obvious one is Solana’s network issues. It is in the public domain that there are issues with Solana network stability. Solana has gone down a couple of times in the last 6-months. This has even been highlighted by top cryptocurrency-related institutional players.

For instance, in late 2021, Grayscale, one of the best-known institutional players in crypto, noted that Solana has issues that include: Centralization, network security, and competition from other networks. Due to these risks, there is a good chance that Solana could lag its competitors such as Ethereum and Terra in the next bull rally.

However, Terra’s high potential is not only premised on Solana’s weaknesses. It happens to be one of the fundamentally strongest cryptocurrencies in the market. Below are some of the reasons why Terra Luna is a better investment than Solana.

Terra Has A Stronger Ecosystem

Compared to Solana, which has a lot of VC influence, Terra Luna is more community-driven and has many interesting projects building on top of it. Terra seems to have captured the algorithmic stable coins market when DeFi is taking off. One of its stable coins, TerraUSD is rising pretty fast on cryptocurrency market rankings. Since these stable coins are anchored on LUNA, the more they grow in adoption, the higher the potential for LUNA to grow in value.

There are a number of other DeFi protocols that are building on Terra as well. For instance, Anchor Protocol has seen exponential growth in adoption due to its high APR. Another Terra-based project that has been growing in popularity is Mirror Protocol, which mirrors the US stock market. Since all these protocols require LUNA to run, there is no doubt that LUNA could explode in value in short to medium term.

The best part is that Terra is a highly scalable, secure, and low-fee blockchain. This means it is likely to keep attracting stable coins and many other projects building Web 3.0 applications. This guarantees growth when compared to Solana and a lot of the other platform blockchains in the market.

Analysts Are More Optimistic About LUNA

While both Solana and LUNA have positive analyst predictions, analysts expect LUNA to perform better in the long-term. For instance, Coin Price Forecast expects Solana to only gain by 168% by the end of 2025. The same analyst expects LUNA to trade higher by 426% by 2025.

Since many investors use analyst predictions as a basis for investing, LUNA could see more investor volumes going into the future. This could see it benefit more from FOMO in future bull markets and could see it return a better ROI than Solana. Crypto is heavily speculative, and even tiny things like price predictions are important to consider.

Don't Miss: Terra Price Predictions

Crypto asset investing is highly volatile and unregulated in some EU countries. No consumer protection. Tax on profits may apply.

LUNA Is A Multi-Utility Token, And That’s Huge

The utility of a cryptocurrency’s native token has a huge role in its long-term value growth. On this front, LUNA wins hands-down. The Terra ecosystem comprises LUNA tokens that run on the native Terra blockchain and the TerraUSD (UST) stablecoin on the Ethereum blockchain.

Through this duo-crypto system, Terra can easily deal with the problem of volatility that affects the cryptocurrency ecosystem. The implications of this are huge, the biggest being the potential widespread adoption of the Terra blockchain.

This potential is already being actualized, and so far, Terraform Labs, the organization behind TerraUSD already has partnerships with more than a dozen eCommerce institutions. The massive adoption works because LUNA-based payments are fast, and their fees are pretty low - less than 1%. Such adoption all points to LUNA potentially exploding in value since the more UST is adopted, the higher the demand for LUNA as well.

Terra LUNA Technology Is Rock Solid

Terra is open source and highly decentralized. Anyone who holds LUNA can take part in its governance while earning staking rewards. So far, Terra has been running consistently with no network downtimes or other issues. This is a huge incentive, especially for organizations that use Terra-based stable coins such as UST.

So far adoption has been huge, and with its stability, Terra stable coins are likely to see even higher levels of adoption going into the future. Since the value of LUNA is directly affected by the adoption of Terra stable coins, the odds are in its favour of LUNA growing in importance faster than most cryptocurrencies, not just Solana.

Crypto asset investing is highly volatile and unregulated in some EU countries. No consumer protection. Tax on profits may apply.

Terra Is Much More Differentiated Than Solana

Solana falls under a category of cryptocurrencies known as Ethereum Killers. These are basically layer-1 solutions that have taken advantage of Ethereum’s scaling and fee issues.

While it is an interesting value proposition, as seen in Solana’s performance over the past year, Terra is operating in an even more interesting market. Rather than try and be the next Ethereum, Terra aims to be the biggest and most acceptable form of decentralized money through algorithmic stable coins.

This is best captured by the words of Do Kwon, one of Terra’s founders. Back in 2021, Kwon did a podcast with @Delphi_Digital and stated that their primary focus is the Terra stablecoin, making it the most decentralized and best form of money ever.

The stable coin's market had a gap before Terra, and over the past year, Terra stablecoins have gained traction. This has given Terra market dominance in its core market, just like Ethereum is the largest platform blockchain market. This dominance could see Terra grow faster than Solana, which has positioned itself as a competitor to a dominant player.