Terra’s UST Poised For More Growth After Surpassing BUSD To Become 3rd Largest Stablecoin

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Terra’s stablecoin, TerraUSD (UST), has pushed past Binance’s BUSD, becoming the 3rd largest stablecoin by market cap. The news comes as the community behind the asset continues accumulating Bitcoin to back UST.

UST Surpasses BUSD In Market Cap

According to data from CoinMarketCap, TerraUSD has surpassed BUSD in terms of market cap to become the 3rd largest stablecoin. UST’s market cap currently sits above BUSD with a market cap of $18 billion compared to the latter’s $17.5 billion. However, it is still a long way from USDT and USDC, which boast a market cap of $83 billion and $49.8 billion respectively.

Notably, data from Messari shows that UST’s market cap has grown 865.81% in the last 12 months and 14.33% in the last 30 days. UST’s market cap growth represents the largest level of growth in terms of percentages by any stablecoin in the top 4. On the other hand, BUSD’s market cap has grown 223.3% year-on-year, dropping by 1.99% in the last 30 days.

While UST’s market cap is growing exponentially, its daily trading volume lags behind its competition. UST’s 24-hour trading volume sits at $634 million, while others in the top 5 handle daily trading volumes in the billions. For example, BUSD’s 24-hour trading volume is currently $4.8 billion.

The low trading volume of the asset indicates that the growth in its market cap is a result of its growing reserve and circulation rather than a sudden increase in demand. As reported by ZyCrypto, the community behind Terra, the Luna Foundation Guard (LFG), has been actively accumulating Bitcoin to back the asset. As a result, the BTC reserve has grown to over 40,000 BTC, worth around $1.7 billion.

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A Truly Decentralized Stablecoin?

Speaking with CNBC’s Kate Rooney, Terra Co-founder Do Kwon gave some insights on the reasoning behind the choice of BTC as a reserve asset for the stablecoin instead of actual dollar deposits currently favored by the competition. Notably, Do Kwon was the one who first revealed the ambitious plan to back UST with $10 billion worth of Bitcoin.

Do Kwon disclosed that while there was nothing particularly wrong with backing a stablecoin with fiat deposits, it created a centralized system where for every unit of the stablecoin minted, a deposit had to be made, creating an issuer and operator system. According to the executive, the system opens the door for risks, including bankruptcy and stifling regulations.

On the other hand, by backing UST with a native cryptocurrency like Bitcoin, Do Kwon says they create a truly decentralized system where anyone can trade in a dollar worth of Bitcoin to mint 1 UST. While LFG has continued to pile up large Bitcoin purchases to build their reserve, it has yet to impact BTC’s price action as traders remain risk-off.