LUNA has experienced a lot of uncertainties after the network collapsed.
Decentralized Applications, especially in DeFi, are on a growth trajectory. As of 2021, DeFi was worth $100 billion, and analysts expect it to be worth 100 times more in the next 5-years.
There has been an explosion of DeFi launch platforms in the last couple of years, too. However, many of them have scaling issues that could curtail the fast growth of this high potential market.
For instance, Ethereum, the number one DeFi platform in the market today, has been dealing with scaling and fee issues for years now. While it aims to solve this problem through Ethereum 2.0, Ethereum is unlikely to fully resolve this issue for many years to come since demand is constantly outstripping capacity.
Terra is one of the platform blockchains that has shown potential in network throughput and sustainability at low fees. However, one may wonder, is Terra still a promising DeFi cryptocurrency after the recent network collapse that saw the value of LUNA drop by 99.99%?
Well, the issues around Terra were caused by the use of LUNA tokens as a stabilizing mechanism for USD Terra (UST). Now that this has failed, the network is working towards a fork. The fork will see Terra get rid of UST and focus on its core strengths, especially as a launchpad for DeFi projects.
Terra already has an established DeFi ecosystem. If it forks to get rid of the now ruined UST, LUNA will be used as both a governance token and for transactions within the Terra DeFi ecosystem.
This guide will explore what Terra is, how it works, and whether LUNA is a cryptocurrency worth investing in today.
What Is Terra?
Before the UST de-peg, Terra described itself as the blockchain for decentralized fiat. Its algorithmic stable coin, UST, was one of the most significant stable coins by market capitalization.
However, Terra is currently in the process of a rebrand and is preparing a fork that will see the network focus more on being a Dapps launchpad. The rebrand is informed by Terra's large developer ecosystem, a large user base of more than a million wallet holders, and global recognition of the Terra network.
Terra intends to retain the name LUNA for the new tokens, while the old network will be named LUNA Classic. When writing this article, voting was still ongoing for fork proposals.
Crypto asset investing is highly volatile and unregulated in some EU countries. No consumer protection. Tax on profits may apply.
How Does Terra Work?
Terra is a distributed network kept online by a network of validators spread across the globe. Terra uses a Delegated Proof-of-Stake algorithm, and validators that vote to add blocks get rewarded with LUNA tokens. In turn, validators have the role of ensuring that the network runs securely.
Before the attack, LUNA tokens were also used as a stabilizing mechanism for UST. However, suppose the hard fork comes to fruition. In that case, LUNA will be used for governance, and transactions within the Terra DeFi ecosystem, pretty much like the role Ether plays in the Ethereum ecosystem.
LUNA Price History
Terra was created in 2019, but it only gained mainstream recognition in 2020. While it is a new player in the cryptocurrency space, Terra has helped many people understand the role stable coins play in the cryptocurrency market.
Since the network went live, LUNA has made a lot of investors rich thanks to its price action over the last two years.
When it launched, LUNA was trading at pennies. LUNA didn't see much price action in 2019. That’s because it launched at a time when the cryptocurrency market was still reeling from the crash of 2018.
While most cryptocurrencies started gaining upside momentum in 2020, LUNA traded below a dollar largely because few investors knew about it.
However, it started building momentum in 2021 as cryptocurrencies went into a full-blown bull market. It is at this point that LUNA turned strongly bullish. While it experienced a few dips in 2021, LUNA closed the year at a high of $100. This represented gains of over 10,000% from its price in 2019/20.
While LUNA started 2022 bearish just like the rest of the market, it rallied ahead of the rest. By March, LUNA had pushed through its all-time highs of $100.
However, it is in May 2022 that things went haywire for LUNA. After UST lost its peg, the team behind Terra went on a massive LUNA printing spree. The result was a dilution of the value of LUNA. By May 12th, just two days after UST lost its peg, LUNA was trading at a low of $0.000001. LUNA had the network stopped but has since resumed, and the network is stabilizing.
When going to press, LUNA was trading at $0.0001159 and ranked #213 with a market capitalization of $757,458,802.47.
Read Also: Will Terra Luna Come Back?
LUNA Price Prediction For 2022 And 2023
Terra has not been in the market for long. In the past year, LUNA emerged as one of the best blockchains for the launch of algorithmic stable coins. However, since the UST issue, the entire LUNA ecosystem has collapsed.
Going into the future, the Terra community is exploring two options. The first one is to fork the network, while the other is to find a way to burn the coins. So far, the community is more in favor of forking the network to focus more on the platform side of the network.
Whether this move will restore confidence in the network or not is a matter of speculation. It can be challenging for any analyst to do an accurate LUNA price prediction short term.
That said, here are some of the top LUNA price predictions today.
Wallet Investor is highly optimistic about LUNA in 2022 and 2023. Their LUNA price prediction for 2022 is $72.71. Wallet Investor also expects LUNA to trade at $77 in 2023, pretty much within the same range as its price in late 2022.
On their part, PricePrediction.net doesn't expect much of a change in LUNA price. Based on their LUNA price prediction, PricePrediction.net expects LUNA to trade at an average price of $0.00013662 and a possible high of $0.00015601 between 2022 and 2023.
Coin Price Forecast is pretty optimistic about the potential value growth of LUNA in 2022 and 2023. Based on their LUNA price prediction for 2022, Coin Price Forecast expects LUNA to end the year up by 175% to trade at $0.000032013. Their LUNA price prediction for 2023 is $0.00035146, which would be a potential price increase of 202%.
While no one can confidently tell the direction that LUNA will take going into the future, it is clear that most analysts are bullish on its potential in the next 2-years.
Don't Miss: Terra (LUNA) Price Prediction
Crypto asset investing is highly volatile and unregulated in some EU countries. No consumer protection. Tax on profits may apply.
How To Invest In LUNA
There are three key ways that one can invest in LUNA. They are:
- Trading
- Holding
- Staking
Below is an in-depth look into each of these three investing methods in LUNA.
Method 1: Trading LUNA
Trading is one of the best ways to make money with LUNA in the short term. The concept behind trading is pretty simple. You buy when the price is low and sell high. Conversely, you can go short if you believe the price is too high and make money as the price drops.
When trading LUNA, you can either choose to trade it against fiat currencies, cryptocurrencies like BTC, or even against stable coins like USDT and USDC.
There are four main ways to trade LUNA depending on your risk tolerance and the amount of time you wish to spend trading. The four are:
- Scalping: Scalping entails trying to trade every price movement, which means you have to trade every minute or every few minutes. Some even go below a minute by using robots to trade.
- Margin Trading: This entails borrowing funds to help magnify gains on a trade. This, however, comes with a high degree of risk and needs a strong understanding of risk management skills.
- Day Trading: Day trading entails trading in most liquid time zones. Sometimes a day trader can carry over a trade into the following day.
- Swing trading: This entails opening trade to take advantage of broader price movements before exiting after a certain threshold is attained.
None of these trading approaches are risk-free, so you have to build up some experience before adopting any of them.
As for where to trade LUNA, you can do so on any of the following trading platforms:
- eToro
- Gemini
- Binance
- Coinbase
- Uphold
While you can choose any of them for your trading, we believe you can get a better experience with eToro. That's because eToro has an easy-to-understand interface. It also has lots of trading tools that make trading a lot more manageable for the average trader.
Crypto asset investing is highly volatile and unregulated in some EU countries. No consumer protection. Tax on profits may apply.
How To Trade LUNA On eToro
- Go to the eToro homepage and create an account
- Deposit into your account
- Look for LUNA and open trade
- Click 'Trade'
- Input the amount you wish to trade
- Click on 'Open Trade'
With this simple process, you have your LUNA trade going. For new investors who may not have much experience with trading, we recommend you choose HODLING. It's less risky, but still no risk free, than trying to time market movements.
To make things easier for you, let's now explore HODLING in a little bit more detail.
Method 2: HODLING LUNA
Holding or HODLING, as is popularly known in crypto, is the process of buying and holding a cryptocurrency for a prolonged period. Essentially, it means you believe in the long-term success of the cryptocurrency.
In the case of LUNA, you buy and put it in a cold wallet, believing that as the network's intrinsic value grows, so will the value of the cryptocurrency.
The best way to hold LUNA is to put it in the Terra Station wallet. Alternatively, you can store it in a hardware wallet such as Ledger Nano S.
For clarity on storing your LUNA, here are the different types of wallets that you can use for storage.
- Hardware wallets: This is considered one of the safest ways to store cryptocurrencies because your LUNA is not connected to the internet.
- Software wallets: These wallets are available for download on either smartphones or desktops. They are pretty safe because you are the only one with access to the private keys.
- Paper Wallets: These are wallets that are printed on a piece of paper. They are pretty safe because, like hardware wallets, your crypto is not connected to the internet.
You can choose any of these wallets, provided you understand the risks involved with each of them. For instance, if you prefer a conveniently available wallet, software wallets are the best. However, if you want maximum security and don't intend to move your cryptos soon, then a hardware or paper wallet would serve you better.
HODLING means you have complete confidence that LUNA will do well long term regardless of the issues it is facing. However, since nothing is ever guaranteed, it is best to combine HODLING with a little bit of LUNA trading. This will help you benefit from long-term price appreciation and the short-term price fluctuations that create profitable opportunities.
You can also try staking LUNA to spread the risk further. But is LUNA staking tenable any longer? Let's find out below.
Method 3: Staking LUNA
Staking is the process of holding coins to help secure the network and maintain operational liquidity. In return, you earn rewards for it.
LUNA uses a Delegated Proof-of-Stake algorithm, which means anyone who does not want to stake can delegate that role to another entity and still earn rewards. While most cryptocurrencies require investors to have a certain minimum number of coins to stake, there are no minimums for LUNA.
How to Stake LUNA
- Deposit LUNA tokens on the Terra Station Wallet
- Open Terra Station and click on the staking button
- Choose one out of the list of validators.
- You will see a section named My Delegations. Click on it and choose Delegate.
- An amount of dialogue box will appear. Enter the number of coins you wish to delegate and select NEXT.
- Enter your wallet password and click Delegate.
One thing you need to remember when staking LUNA is never to stake your entire wallet. Always have some amount left in your account to pay fees.
Once the process is done, you will start receiving LUNA in your wallet as staking rewards.
Is LUNA A Good Investment?
So, is LUNA a good investment? Like every other investment, it is always best to do your due diligence before investing.
The Terra network is in the process of rebuilding, and the moves they make will determine how tenable it is as an investment. So far, one of the proposals that are gaining traction is to fork the network. The idea is to get rid of UST and focus on the Terra blockchain as a launchpad for Dapps.
If this proposal works, LUNA could be a good cryptocurrency investment for 2022 and 2023. That's because platform blockchains are growing in adoption, especially in DeFi.
Terra is one of the most scalable platform blockchains in the market today, which could drive its adoption long term. That said, LUNA is still at a very volatile time, and there is always a chance that it may never recover the community trust it had before.
Below are some of the factors that could play a role in LUNA's long-term value growth.
- Regaining community trust: The Terra blockchain has recently received a lot of negative press. As such, regaining community trust is key to its long-term growth. If the community still believes in Terra as a launchpad for Dapps, its success odds are good long term.
- Growth In the DeFi space: One of the key areas that will likely drive value growth for LUNA is DeFi. Currently, DeFi is worth $100 billion, and expert projections are that DeFi could be worth 10X its current size by the end of the decade. If these projections come true, and the same reflects in the value of LUNA, then the price of this token could go up.
- Competition: Competition is tight in the Dapps space, and Ethereum remains a dominant player in this market. Cryptocurrencies that can prove to be the best will win. For LUNA, this is strongly tied to restoring trust in the network by both investors and developers.
- Regulations: As a DeFi cryptocurrency, LUNA's potential is tied to the kind of DeFi regulations that will come going into the future. If they are positive, the network will thrive. The reverse also holds.
- Tokenomics: After the crash of UST, trillions of LUNA tokens were minted to try and restore the dollar peg. Now that this did not work and there are still trillions of tokens in supply, it could act against LUNA price growth long term. However, if the community finds a way to burn all the excess tokens that entered supply, LUNA could do well long term.
With all the above factors at play, it is hard to tell the direction that LUNA can take long term. It is best only to invest what you can afford to lose.
Crypto asset investing is highly volatile and unregulated in some EU countries. No consumer protection. Tax on profits may apply.
Conclusion: So, Should I Buy LUNA?
Whether you should buy LUNA or not is a function of your risk tolerance and investment goals (Long-term holding or short-term trading).
If your goal is to trade, then LUNA is one of the most volatile cryptocurrencies and a perfect cryptocurrency to trade today.
However, if you are buying to hold long term, you should diversify your investments just in case things don't work out for LUNA. This way, you minimize the risks of significant exposure if things go wrong while also potentially profiting if they work out.
eToro – The Best Platform To Buy Terra
Crypto asset investing is highly volatile and unregulated in some EU countries. No consumer protection. Tax on profits may apply.
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