Try Quests to earn cryptoTerra.Steady.As.She.Goes.stability.in.market.downturns
In this bounty, the performance of Luna against market downturns is studied. Furthermore, the stability or resiliency of Luna compared to other leading currencies is estimated.
Introduction:
Terra blockchain:
Stable coins can be considered as the core of transactions in the blockchain world. This is why many companies are looking to build stable currencies for this area. Terra cryptocurrency is one of the first projects that has been very successful. This network has two tokens called Luna and Terra. Terra currencies are numerous and have a fixed price. Luna token has a variable price, but instead is a currency support to stabilize the price of Terra currency. This two-currency protocol is arranged in such a way that it can easily create a decentralized stable coin. On the other hand, this network is designed in such a way that it can support smart contracts and decentralized applications. The structure of this cryptocurrency is considered as another important factor that has involved the audience to some extent. In fact, it should be noted that Terra Blockchain and all Terra and Luna currencies in general have been created using the Cosmos SDK software kit. Accordingly, it can be said that this currency is an independent blockchain that also adopted smart contracts. In addition, like other blockchains developed with Cosmos, it uses the POS method as a way to verify its blocks.
Broader market downturns:
The cryptocurrency market has always looked at Bitcoin, and therefore its growth or decline is important for the whole market. Due to the decrease in the price of Bitcoin, analysts attribute the decline in the cryptocurrency market to the link between declining technology stocks, existence of war threat and economic issues related to pandemic situation. In this pressure of market, one of the hot topics on twitter is resistance of Luna against market downturns. The Luna token acts as a main actor of Terra blockchain. Therefore, the resiliency of Luna token against huge market downturn is analyzed from various aspects.
Time period:
The simulations of this bounty is executed over the last 3 months (90 days). This time period is adopted in all of the following charts and numbers.
Resiliency of Luna against market downturns
Given the definitions of the Luna token, the severe market downturn and other considerations in this section, we want to talk about the resilience of the Luna currency. A specific indicator has been defined to assess the resilience of the Luna token in the face of the severe downturn in the cryptocurrency markets. The criteria used in this research is the difference between the minimum and maximum exchange rate in the specified time period and also the time required for the price to return to the range before the market recession. This defined index is examined on the price of Luna in a specific period of time and its results are compared with Sol token which is considered as the reference currency in this research. The following is a brief description of the Solana network and its local currency
The results of comparing the Luna and Sol currencies over a period of time and the index defined in the following curves are shown.
Solana blockchain and SOL
Solana Currency is a high-performance cryptocurrency blockchain that supports smart contracts and decentralized applications (DApps). This blockchain uses a kind of collective certificate of share agreement mechanism that utilizes time-stamped transactions to maximize efficiency and can be easily entered by individuals. Solana native Token (SOL) is the exclusive cryptocurrency of Solana blockchain. This token is burned to pay for Solana network fees. To increase acceptance, all fees paid are calculated via the SOL token. Also, after receiving the commission, the tokens used as commission are burned. This reduces the total supply over time. The combination of these two features will increase the price of the SOL token in the long run
According to the price charts of Luna and Solana in the 90-day period, as it is known, the price of each wage round has started to decrease since December 20, which can be considered as the beginning of the digital currency market recession. As mentioned, the period of return to price before the market recession is defined as an index of resilience. According to this index, the Luna currency has started to increase in price since February 22, and the price of each unit has returned to the same price after almost 60 days before the market recession. But this has not happened for the currency. Although according to the chart related to the price of Sol currency, it has increased, but it has not even come close to the price before the market recession.
Summary:
The unique structure of Luna currency has made this cryptocurrency has very special features that distinguish it from other existing projects. This factor in its kind is known as one of the most important and, of course, the most vital components that has led activists in this field to cryptocurrencies.
Security can be considered as one of the most important factors for stable coins. Luna's development team has mastered this issue to the fullest, which is why they have used the POS stock proof system to secure themselves, which is used in many current cryptocurrencies.
Terra blockchain was created using the Cosmos Development Kit. This kit provides support for smart contracts. This makes the network the platform for decentralized applications or intelligent protocols. The presence of stable coins in this network is another factor that has led to a good reception of smart contracts in this network.
The dual currency protocol can be considered as another factor that makes Terra network very unique. This network is one of the few blockchains that has two types of tokens in its network instead of one token. It should be noted that these two currencies are completely interdependent. This dependence keeps their prices away from unreasonable fluctuations. This is what is not seen in other two currency protocols.
The difference between the maximum and minimum price of each token in the specified time period is calculated and this difference is specified in the percentage of the largest price difference. For the currency in the 90-day period, the maximum price was 99$ and the lowest was 47$. These numbers are the largest price difference for the Luna currency is 107%. Also for the currency Sol, the highest price in the last three months was 200$ and the lowest price was 82$, which shows the largest price difference of 146% for this currency.
According to the surveys and the defined index, as it is clear, the Luna has shown a significant resilience in the face of the widespread recession in the cryptocurrency market, while the width of Solana has experienced a significant price fall.
