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Thursday, January 27, 2022

Gaining From bLUNA And LUNA: Terra Traders Utilize Arbitrage To Make Profits

It hasn’t been a holiday season for the crypto market as it shows little sign of slowing down. And Terra was among the most active as the year ended and reached its highest ever when it comes to TVC, or total value locked. The project even went past Binance (BSC) after Ethereum (ETH) to become the 2nd biggest decentralized financial blockchain.

It rose to the $20B mark total value locked mark a day before Christmas. TVL of Terra has gone down marginally to $19.3B, but according to DeFi Llama, it does not in any way indicate a bearish trend either in form or shape.

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Terra has at present just 14 protocols made into its chain. That seems tiny equated with around 257 protocols present on Binance and over 377 protocols on the ETH (Ethereum) network.

Liquidity has not been a problem for Terra and its protocols managed to entice liquidity successfully.

The latest Astroport launch has coincided well with the quick rally of LUNA, Terra’s native governance token, that reached a record high the day after Christmas.

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A look at LUNA versus TVL in USD, the latter had grown exponentially from September last year. LUNA has remained flat around that same period.

The increase in TVL in USD recently has been the result of an increase in the price of LUNA.

Even as the increase in price in governance tokens show the confidence of investors in protocols and the chain, there is also an apparent production of more money-spinning arbitrage opportunities.

Terra: Strategies Employed to Arbitrage among LUNA And bLUNA, Its Staked Asset

LUNA represents the staking and governance token. bLUNA on the other hand represents the bonded LUNA and the matching block rewards.

bLUNA, like LUNA, is transferable and fungible, it is traded similarly on the decentralized exchange of Terra.

Just as with other token ore currency pairs that are traded in exchanges, both the LUNA and bLUNA pair are traded generally at different prices on different DEX (decentralized exchanges), including Loop Markets, TerraSwap, and Astroport. This difference is due to inefficient pricing across various platforms.

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