- DeFi-based
cryptocurrencies SOL and LUNA have surged by 40% in the last two days to an all-time high. - The altcoins are witnessing renewed interest alongside Bitcoin and Ethereum.
- Both the projects enjoy generous funding from A-list investors such as Andreessen Horowitz and Galaxy Digital.
- Like Cardano and Polkadot,
Solana intends to challenge Ethereum’s dominance in building and deploying decentralised applications. Terra is a platform with a plethora of stable coins pegged to different fiat currencies.
Despite the security issues involved, the market is hugely optimistic about Decentralised Finance (DeFi) tokens, surging the value of Solana and Terra tokens to an all-time high over the past two days.
Solana ($SOL) is up 40%,
valuing the token at more than $70. It has managed to break past its peak of mid-May and has a market cap of more than $20 billion.
Meanwhile, Terra’s token, called Luna ($LUNA), is
also up by almost 40% and priced at a little more than $26.
Both the DeFi projects have witnessed trading volume rise by a whopping 50%. Despite a massive hack on Poly Network, which resulted in the
theft of more than $600 million, investors aren’t afraid about DeFi’s future at a macro scale.
According to crypto-intelligence firm,
CipherTrace, DeFi-related attacks have nearly tripled since last year, and so far this year — excluding the Poly Network hack — their value made up for three-fourths of the major hacks of 2021.
Advertisement
DeFi projects aim to use blockchain — the technology which underpins most
cryptocurrencies — to replicate traditional financial services like loans and trading. However, it has become a prime target for attacks, and according to
CipherTrace, hackers managed to steal $361 million in just the first seven months of 2021.
In contrast, the Poly Network hack is nearly double the size.
The overall
greater investor confidence.
Solana wants to take on Ethereum on its home turf
Like
Cardano and
Polkadot, Solana intends to challenge Ethereum’s dominance in building and deploying decentralised applications. It was founded in 2017 amid the
initial coin offering (ICO) boom, emerging as a potential contender.
The blockchain platform claims it can process more than 50,000 transactions a second, rivalling Visa’s range of 65,000 transaction messages a second (TPS). The number of transactions on the network crossed 100 million last month and consistently hit 120 million transactions for August.
The thing that makes Solana unique is its consensus mechanism — based on the proof-of-history concept. Created by Anatoly Yakovenko, Solana
assigns timestamps to each transaction, allowing nodes to keep track of them. As a result, the time it takes to confirm blocks in the network is reduced. This feature is also available in Ethereum, but Solana is far more efficient, delivering faster transactions. It’s possible because validators process transactions and earn rewards.
The proof-of-history protocol speeds up the network and integrates well with Solana’s joint proof-of-stake protocol, allowing token holders to validate transactions themselves. The project is backed by Solana Labs, which
received $314 million in funding led by Silicon Valley veteran investors Andreessen Horowitz and Polychain Capital.
Terra is enabling the integration of fiat currencies
Unlike Solana,
Terra is a platform with a plethora of stable coins pegged to different fiat currencies. For example, UST is one of Terra’s stable coins, and it’s pegged to the USD. Terra is a synthetic asset platform that allows for the tracking, issuing, and trading of real-world assets, such as equities, via Mirrored Assets (mAssets). They are tied to tangible assets and simply mirror their exchange price.
LUNA serves as a governance token and is used as an algorithmic balancing system that helps the stablecoins maintain their pegs. For example, when TerraUSD trades above $1, users can send $1 worth of LUNA to the system and receive 1 UST in return
It aims to become the first widely used cryptocurrency by
pushing adoption through an impressive e-commerce alliance, including Asia-Pacific giants such as TMON, Baemin, Carousell, Qoo10, and Tiki.
Terra is now led by the South Korean firm Terraform Labs, founded in 2018 by Daniel Shin and Kwon.
Its main criticism is that it is less decentralised than other blockchain platforms like Ethereum, which is powered by thousands of interconnected computing nodes worldwide. Terra enjoys the backing of several major blockchain firms, including leading venture capitalist Galaxy Digital.
DeFi is touted to be the next frontier for blockchain and cryptocurrencies. And with newer concepts like NFTs booming, investors are confident that cutting-edge technology has the potential to create value.
SEE ALSO:
Hacker behind $610 million crypto hack conducts AMA — claims returning the money was always ‘a part of the plan’
Crypto markets are recovering, and mining companies in North America are raking in the gains