Terra's DeFi Value Hits Record-High $21.8 Bln, What It Means For Luna:

Terra, the second-largest DeFi blockchain, saw its total value locked (TVL) jump to a record high on Tuesday amid an increasing number of deposits.

Data from DeFi Llama showed that TVL on the Terra blockchain jumped nearly 5% to a record high of $21.8 billion. The blockchain is now behind only Ethereum in terms of TVL, although the gap is astronomical- ETH’s TVL is $81.6 billion.

Lido and Anchor Protocol, the two largest DeFi liquidity platforms on Terra, saw the biggest jumps in TVL, about 8% and 10%, respectively. Anchor also continues to dominate Terra’s DeFi market, accounting for nearly 76% of TVL.

LUNA, Terra’s native token, rose in tandem with the blockchain’s TVL.

Terra’s growing DeFi value positive for LUNA

Given that a bulk of engagement with Terra’s DeFi platforms happens through its native token, LUNA tends to benefit from increased activity. The token added 8.5% in the past 24 hours, and is trading at $96.46.

The latest gains also helped LUNA overtake Ripple (XRP) to become the seventh-largest cryptocurrency, at a $33.5 billion market capitalization. The token saw outsized trading volumes in the past 24 hours, at $2.5 billion.

Given that a bulk of TVL inflows were concentrated towards Anchor Protocol, the platform’s governance token, ANC, also jumped 9%. Anchor currently offers among the highest yields for deposits in the DeFi space, at 20%. The high yields are a key driver of inflows to the platform.

Increased engagement with Terra’s DeFi platforms also pushed up trading volumes for its stablecoin, UST. Total UST circulation is now above $18 billion.

Questions over sustainability

But while Terra’s DeFi interest has surged in recent weeks, it has also come with a layer of skepticism over its sustainability.

Anchor, in particular, has a disproportionately large number of depositors over borrowers, meaning that eventually, paying a 20% yield on all deposits is going to bleed the platform’s reserves.

While the community has taken measures against this, by implementing a dynamic yield, the number of depositors are continuing to rise at a staggering pace. This could also eventually bring the yield to market-average levels, making Anchor less lucrative to invest in. An outsized number of deposits also makes the platform extremely vulnerable to liquidity shocks.

Anchor's deposits are far more than borrowings — Anchor’s deposits are far more than borrowings

Still, Terra founder Do Kwon has been consistently boosting UST reserves to avoid such a scenario. Kwon intends to back UST with $10 billion in Bitcoin.

Recommended
Price Analysis

Best Crypto Presales To Invest In September 2025 – Top Upcoming Presale Tokens

Best Crypto AI Trading Bots In 2025

Top Meme Coins To Buy In September 2025

Ambar Warrick

With more than five years of experience covering global financial markets, Ambar intends to leverage this knowledge towards the rapidly expanding world of crypto and DeFi. His interest lies chiefly in finding how geopolitical developments can impact crypto markets, and what that could mean for your bitcoin holdings. When he isn't trawling through the web for the latest breaking news, you can find him playing videogames or watching Seinfeld reruns. You can reach him at [email protected]

Why trust CoinGape: CoinGape has covered the cryptocurrency industry since 2017, aiming to provide informative insights to our readers. Our journalists and analysts bring years of experience in market analysis and blockchain technology to ensure factual accuracy and balanced reporting. By following our Editorial Policy, our writers verify every source, fact-check each story, rely on reputable sources, and attribute quotes and media correctly. We also follow a rigorous Review Methodology when evaluating exchanges and tools. From emerging blockchain projects and coin launches to industry events and technical developments, we cover all facets of the digital asset space with unwavering commitment to timely, relevant information.

Investment disclaimer: The content reflects the author’s personal views and current market conditions. Please conduct your own research before investing in cryptocurrencies, as neither the author nor the publication is responsible for any financial losses.

Ad Disclosure: This site may feature sponsored content and affiliate links. All advertisements are clearly labeled, and ad partners have no influence over our editorial content.