Bitcoin's (BTC) price appears to have faked out investors with its motility to $42,000 last week, and while the digital asset struggles to hold above $38,000, altcoins with strong fundamentals and existent-world applications are gaining momentum.

Terra (LUNA), a blockchain protocol that backs the fiat-pegged TerraUSD (UST) stablecoin, is one such project that has managed to buck Bitcoin's downtrend and climb college since the start of August.

LUNA/USDT one-day chart. Source: TradingView

Information from Cointelegraph Markets Pro and TradingView shows that the price of LUNA has rallied 162% from a low at $v.53 on July 20 to an intraday high at $14.51 on Tuesday as its 24-hour trading volume increased from $137 million to $774 million.

Three reasons for the surge in involvement include LUNA's speedily expanding ecosystem, the addition of a wrapped form of Ether (ETH) to Anchor protocol, which brings Ether staking rewards to the Terra ecosystem, and the protocol's tokenomics, which help control the circulating supply of LUNA and UST.

Ecosystem growth attracts new participants

One of the clearest signs of adoption for the Terra ecosystem is its rapidly expanding list of partners and projects launching on the Terra blockchain.

Terra ecosystem. Source: Smart Stake

The growing ecosystem offers access to some of the hottest sectors in cryptocurrency, including decentralized finance and nonfungible tokens, likewise as bridges to other blockchain networks, such as Ethereum and Solana. The blockchain besides supports numerous retail and payment protocols that allow token holders to use LUNA and UST for everyday purchases.

Terra currently offers stablecoin support for 17 fiat currencies including the The states dollar, the euro and the Canadian dollar, and there are plans to expand this list as the ecosystem grows.

Related : New study reveals loftier demand for payments in cryptocurrency

Anchor protocol votes to add together Ether as collateral

A 2nd reason for the bullish price growth seen in LUNA is the ongoing vote on the Anchor protocol to add wrapped Ether to the platform in order to mint UST.

The integration is fabricated possible through a partnership with Lido, a staking protocol for Ethereum and Terra, which enables stakers to receive liquid stETH (staked Ethereum) and bLUNA (bonded LUNA) tokens.

Should the vote laissez passer, Ether volition get the start collateral option to bring in staking rewards from outside the Terra ecosystem, and this is expected to boost the full value locked on the protocol to a new all-time high.

LUNA burns equally traders arbitrage UST

A third reason for the increment in demand for LUNA relates to the protocol's tokenomics and the utilization of LUNA to mint UST.

In order to mint new UST, an equivalent amount of LUNA must be burned in the procedure, which has an result on the supply and price of LUNA.

As established platforms like Mirror Protocol grow and require more UST to bootstrap the platform and new protocols launch on the Terra network, the increased demand has the potential to trigger price gains for LUNA and UST.

College need for UST typically pushes its cost above $1, and this results in arbitrage opportunities for token holders who tin can buy $1 of LUNA on commutation and burn it via Terra Station for ane UST even though the price of UST may currently be $ane.x.

This mechanism is how new UST enters the market and as well ensures that the protocol maintains its price peg at $1.

Every bit seen in the higher up tweet, as new UST were being minted over the past week, the circulating supply of LUNA has decreased, and this had a positive event on LUNA price.

The addition of Ether as a collateral pick combined with a growing field of stablecoin offerings and new protocols launching on the network all have the potential to lead to further increases in LUNA price.

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