The cryptocurrency industry is filled with loads of jargon and unique quirks — even those with the financial know-how find the crypto markets challenging. There are a lot of crypto-specific factors that impact the growth, adoption and returns of this emerging blockchain-powered industry.
When trying to understand the nuances of a specific cryptocurrency, it can be helpful to think of a crypto project as something similar to a high-growth start-up.
Venture Capital funds — otherwise known as “VCs” — pool together money from different investors to invest in a basket of start-ups and ask three important questions before making any investment:
Question 1: What does this company offer that the others don’t?
Question 2: Is this company showing growth and interest in its product?
Question 3: What problem does it solve and how big is the market for this problem?
“Answering the same questions when it comes to cryptocurrency investing makes sense and is the approach that many professional cryptocurrency investors take when evaluating what to invest in,” explains Brett Hope Robertson, Crypto Investment Lead at Revix.
By asking these questions of the top-performing crypto of 2021 (LUNA) we get to peek into all the potential that the Terra network has to offer.
What are Terra and LUNA?
The Terra network is a cryptocurrency that is different to Bitcoin but is similar in functionality to Ethereum, Cardano and Solana.
Bitcoin is a hybrid digital payments system and digital gold investment option. Ethereum, Cardano and Solana, on the other hand, are known as “smart contract” enabled cryptocurrencies. Unlike Bitcoin, these cryptocurrencies enable applications to be built on top of their blockchain networks — just like you have different apps that run on your mobile phone’s operating system.
The Terra network, with its native cryptocurrency LUNA, is also a smart contract enabled cryptocurrency, but what separates it from the others is that it has a very different focus. If you look at Terra as a company, it could be seen as a mix of a bank (like FNB) and a payments network (like Visa) that aims to make banking and payments cheaper and faster.
It might be surprising to some that the Terra networks’ LUNA cryptocurrency was the best performing investment over the last year, returning over 14 700% in 2021.
In fact, an R1 000 investment in LUNA would have translated into +R147,692 over the past 12 months. This return on investment is over 240x greater than if you had invested in Bitcoin over the same period. The latter would have offered you an investment amount today of +R1,594.
This is an astonishing return that has made all the LUNA tokens in existence (known as the market cap of the network) worth over $20-billion. That’s roughly the same total value as the MTN and over 5x the total value of Woolworths.
Astonishing returns, but what is driving this value?
The Terra network is one of the leading smart contract enabled blockchain networks aiming to rebuild the slow and expensive payment system that we have today. Terra does this through the creation and transfer of stablecoins.
Stablecoins are simply cryptocurrencies that are pegged to conventional government-backed currencies (i.e. the rand or US dollar).
The Terra blockchain network allows its users to spend, save, trade, or exchange these stablecoins instantly. All of this can be done on the Terra blockchain without the need for any banks or financial intermediaries.
The best way to simplify what Terra does is to think of it as the foundational enabling layer for extremely unique and groundbreaking FinTech applications.
You can think of investing in Terra like investing in a basket of FinTech and banking apps, each with its specific use case and potential customer. Rather than having ownership of one app, you have the chance to own the foundational application layer that runs the most successful FinTech apps. That number of applications could grow as much as developers are willing to build on Terra’s network.
Here are the factors that drove LUNA’s 2021 returns:
- The significant technological developments of the Terra network that improved scalability and functionality
- Over 70 newly confirmed projects are set to be built on Terra this year, which is one of the largest pipelines in the crypto and blockchain space
- The potential of the Terra network to win over the market share of a very large market.
What is LUNA?
LUNA is the Terra protocol’s native cryptocurrency and one of the top 10 largest cryptocurrencies as measured by market cap.
The LUNA token serves two purposes: to create and stabilise the price of the stablecoins on the protocol, and to give its holders governance rights over how the network is run.
By focusing on stablecoins, the Terra protocol has made financial applications very efficient. This, as a result, has amassed billions of dollars in value. Terra users can send money to one another in a matter of seconds, earn interest on their savings and even take out a loan.
Should I buy Terra’s crypto LUNA?
Time to think like a VC. You need to ask yourself what problem is being solved? Is Terra seeing adoption? And, how big is the market it aims to disrupt?
The Terra network is:
- Making the global payments system more efficient
The Terra blockchain can handle over >10,000 transactions per second at near-zero cost, even on weekends. Visa, which processes 1,700 transactions per second, only transacts on weekdays and costs over 100x more.
- Seeing explosive growth
Even though Terra is still relatively new, it has amassed vast amounts of value. Terra’s Chai payment system has two million users, and according to Terra’s website, processes more than $1-billion in transactions each year.
- Further growth potential
The global FinTech markets and payments sector is valued at over $160-billion and is expected to grow to $310-billion at an annual growth rate of 24% through 2025. Stablecoins, which Terra enables through its blockchain network, have opened a multi-trillion-dollar opportunity in the payments and finance space and have seen growth from $5-billion to $170-billion in supply. Terra’s stablecoins could achieve a 20% market share by 2025 from less than 8% currently in 2022.
Where can I buy LUNA?
Cape Town-based crypto investment platform Revix (www.revix.com) will be the first platform in South Africa to offer Terra (LUNA).
Revix’s platform makes crypto investing effortless. You can get started in just a couple of minutes, and use their online platform to check in on your crypto whenever you want, wherever you are.
With Revix you’re in safe hands. Not only is the fintech backed by JSE listed Sabvest but they were the first platform in South Africa to perform a proof-of-reserves audit independently verifying that all their customers’ assets are safe and secure.
Revix will be offering LUNA from 25 February 2022, with an enticing fee-free promotion on all investments.
How would you invest if you knew you couldn’t lose? Revix is giving you that chance. From 16 to 28 February, Revix is offering you the opportunity for an investment that cannot decrease in value. And if it does, Revix has you covered. It’s your chance to make money and diversify your portfolio with the confidence that you can only win.
How do I take part?
Sign up using the promo code: COVER. After signing up, you need to invest R5 000 into either the Smart Contract Bundle, the Top 10 Bundle or the Payment Bundle between 16 February and 28 February 2022*. During this period, your investment is covered against loss. If the value of the Bundle has decreased by the end of the promotion period, Revix will pay you back the difference. It’s that simple. You will be compensated in Bundle units only. *T&Cs apply.