The collective value of all crypto-currencies reached a peak of nearly $3 trillion in November. This is particularly impressive considering how quickly they have reached this valuation – the cryptocurrency market did not even exist 15 years ago. Of course, the ascent was not easy. Crypto assets are notorious for their volatility, and the market is down 43% from its peak.
On the bright side, this sort of thing has happened many times before, and it has always ended the same way: Cryptocurrency prices rebound, and the market continues to reach new heights. With that in mind, now seems like a good time to put your money to work, and Cardano (ADA 8.69%) and Terra (LUNA -0.66%) seem like smart long-term investments.
After leaving Ethereum, See also: Four Polkadot (DOT)-Based Altcoins Explode Amid Rapid Ecosystem Developments.Charles Hoskinson launched the Cardano project in 2015. Rather than rushing to complete the platform, the developer team moved forward slowly and methodically, subjecting new features to academic peer review. This differentiates Cardano from other blockchains. In fact, it features the first blockchain consensus mechanism based on peer-reviewed research, Ouroboros.
Ouroboros is a proof-of-stake (PoS) protocol in which validators are randomly chosen to add new blocks to the chain. This method differs radically from proof-of-work (PoW), a system in which miners compete on the basis of their computing power for the right to add blocks to the chain. Cardano is therefore much more energy efficient than cryptocurrencies PoW like Bitcoin and Ethereum.
The academic rigor of Cardano’s developer team has also influenced blockchain in other ways. For example, the project itself has been divided into five stages that focus on the following features: foundation, decentralization, smart contracts, scalability, and governance. Most recently, the smart contracts feature went live last September, an event that could boost Cardano’s growth in the coming months, as developers can now deploy decentralized applications (dApps) and decentralized financial products ( DeFi) on the platform.
In the next phase of development, the consensus protocol will be upgraded to Ouroboros Hydra, which will allow for the creation of multiple side chains. Think of sidechains as additional blockchains connected to the mainchain. They distribute the network load more efficiently, which increases performance. In fact, early tests showed that sidechains could reach 1,000 transactions per second (TPS), which means that with 1,000 side chainsthe network could reach 1 million TPS.
Cardano’s scalability should attract more DeFi developers and investors to the platform. And since these products aren’t free — users have to pay transaction fees with the blockchain’s native cryptocurrency — demand for the ADA coin is expected to grow, making the cryptocurrency more valuable over time.
Terra is a programmable blockchain powered by two different tokens. Read also: Here is why the price of Terra (LUNA) could see a massive uptrend before long.. First of all, TerraUSD is a stablecoin that tracks the US dollar, although Terra coins can also be pegged to other fiat currencies. Second, LUNA is a cryptocurrency that absorbs volatility, holding each stablecoin at the target price. For example, if the surge in demand pushes TerraUSD above $1, the network will incentivize token holders to convert LUNA to TerraUSD, which will reduce its price by increasing supply. The system works the same way in reverse.
Terra is built on the Cosmos framework, which itself is powered by a high-speed PoS consensus protocol known as Tendermint. To that end, Terra can theoretically go to 10,000 TPS while finalizing transactions in two seconds. By comparison, Ethereum can handle around 14 TPS, and it takes at least a minute to finalize transactions. This lack of scalability has led to a sharp increase in network transaction fees over the past few years.
So why invest in LUNA? Terra’s throughput has made it popular with DeFi investors. In fact, it is the second largest DeFi ecosystem (behind Ethereum), with $29 billion invested on the blockchain. And two products are particularly noteworthy: Anchor and PaywithTerra.
Anchor is a DeFi protocol designed to replace traditional savings solutions. Investors lend TerraUSD to the platform in exchange for interest, and the payout rate is currently 18%. Likewise, PaywithTerra allows online merchants to accept Terra stablecoins. And because it’s built on Terra’s highly scalable blockchain – a platform that bypasses traditional financial institutions – transactions settle faster, and they incur fewer fees. In fact, merchants pay a fixed amount of $0.05 per transaction. For comparison, PayPal charges 3.49% plus a flat fee of $0.49 for domestic transactions settled in US dollars.
In short, disruptive DeFi products like Anchor and PaywithTerra create demand for Terra stablecoins, which translates into demand for LUNA, as the network incentivizes token holders to convert LUNA to Terra to keep the stablecoin at the appropriate price. . And this demand is expected to drive up the price of the token. In other words, the more Terra is used, the more Luna is worth. This is why this cryptocurrency seems like a smart buy.
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