LUNA climbed as much as 5% and briefly hit a record high of $119.10. The token has been on the rise after hitting 2022 lows in February. Much of the rally can be attributed to the growing popularity of UST and the popularity of the Terra blockchain as a DeFi platform. The gains also showed that LUNA avoided a wider pullback in the crypto market.

Terra's popularity in the DeFi space is supported by the community's efforts to maintain liquidity. Terra is currently the second largest DeFi blockchain by total locked value (TVL) of $21 billion. This has increased the use of LUNA given that it is the primary environment for on-chain transactions.

Terra Luna-4

Terra's Anchor Protocol (ANC), the largest protocol in the chain, has grown in popularity, offering the highest throughput in DeFi at around 20%. Although the platform has recently voted to cut returns, it still commands over $16 billion in TVL, the third-highest among DeFi platforms.

Additionally, the Terra community regularly burns LUNA to print UST, a move that reduces LUNA's overall supply and increases its price. According to Terra Analytics data, nearly three million tokens have been burned in the last five days. This brings LUNA's total supply to a record low of 351 million tokens.

Terraform Labs CEO Do Kwon

Terra founder Do Kwon has repeatedly stated his goal of making UST the most popular stablecoin. To that end, the Terra community has continually purchased Bitcoin (BTC) to use as a backup for UST, a move that has grown in popularity with LUNA. Kwon explained in a recent interview:

   “The goal is not to be the largest stablecoin on the Terra blockchain, so we are expanding to compete with the Solana, Avalanche, Ethereum and Polygon ecosystems. We plan to be wherever there are developers and users.”

UST is the largest algorithmically supported stablecoin that uses a mix of reserves and tokenomics to maintain the dollar stable.