- A decentralized financial infrastructure with focus on Stablecoins
- It supports several Blockchain systems
- DPoS network ensures security of transactions
- Backed by some prominent ventures
- It supports some prominent Stablecoins already
- The LUNA coin can be staked and users get rewarded
- The price stability algorithm is reassuring for new users and investors
- Making Dapps on its network is easier
- The latest developments on Terra ecosystem are promising
- South Korea has imposed stringent crypto sector laws which may thwart its growth
- The LUNA token is not supported by some major crypto exchanges, as of now
- It faces competition from government-backed digital currencies which will be unveiled
With time, the usage of digital payment systems and means has grown up and this is a global trend. You see more people using debit and credit cards than making cash transactions, except in really financially backward regions. Even in the digital payment sphere, things keep changing. With users seeking more secure and faster digital transaction methods, the demand for cryptocurrencies has shot up. Every fortnight, you may read about new crypto coins and platforms popping up. Some of these new-generation cryptocurrencies are laden with advanced features. One such example is LUNA.
What is Terra (LUNA)?
Terra is a cryptocurrency creation and management protocol. Its native token is LUNA. The decentralized financial infrastructure was started in 2018 and the company Terra form Labs is based in South Korea. It was set up by Do Kwon and Daniel Shin. In recent times, it has managed to garner lots of attention from the crypto sector experts and users. Terra has witnessed maximum success in its home turf, South Korea.
While Luna cryptocurrency has not reached the league of top 20 in terms of market cap, Terra Blockchain is deemed as one of the leaders in the sector. The noteworthy thing about Terra’s Luna token is it is hard to locate an exchange where you can buy it. Some popular crypto exchanges do not support it yet.
The basics of Terra
Terra’s main focus is on stable coins, which are cryptocurrencies linked to well-known assets. Terra supports stable coins like TerraUSD (UST) and the Mongolian tugrig, along with the South Korean won (TerraKRW (KRT)). Luna tokens are Terra’s means of stabilizing the price of stable coins. It resorts to incentives-based trading between stable coins and Luna. The stable coin supply is increased and diminished as per the situation to balance out price.
Luna token holders are allowed to stake their tokens. By staking Luna, users pledge the coins to the Terra network and they are then utilized for transaction verification. While unstaking the coins are possible, that may take up to 3 weeks. Token holders have a role in determining the future of Terra. Luna is a governance coin and so its holders get voting rights.
Terra is a Delegated Proof-of-Stake network. So, the Validators give nod for transactions and block creation. They get rewarded by LUNA. Terra makes use of a community-based governance system.
In March 2021, Terra launched Anchor- a lending and savings protocol. This lets the users deposit stable coins and earn interest on them. For making UST deposits, they get a yearly interest rate of 20%. As UST is a stable coin the idea of getting 20% yearly interest on it seems enticing. However, the interest rate may not remain the same forever. The protocol supports instant withdrawals and deposits.
The unique features of Terra
- Terra promotes interoperability and the network runs on several chains- linked to the Cosmos IBC. It actively supports Ethereum and Solana.
- Terra is development-focused and developers can build smart contracts using AssemblyScript, Rust, Go.
- Terra enables developers to add more features to Dapps through off-chain sensors called oracles.
- It is meant for developing a transparent ecosystem. It seeks to replace complex payments value chain with one Blockchain layer.
- It can develop fungible assets courtesy the Mirror Protocol.
- It supports smart contract execution by using GAS, much like Ethereum.
Why investors should think of choosing Terra
New generation cryptocurrencies and the platforms behind these are being developed with a clear aim, unlike first-generation projects like Bitcoin. Terra project supports several stable coin options for instant settlement. To achieve this, the network relies on a well-defined price-stability algorithm and that changes the monetary supply of linked assets to retain the desired value. So, Terra can be good for making stable cross-border transactions involving responsive financial assets.
Terra is meant for resolving issues faced by the most stable coins. It aims to reduce market centralization. Its protocol supports multiple Blockchain systems. All these factors make the investors feel assured about its stability and growth prospects.
What the future of Terra looks like?
Despite the fact it is a new entrant to the fast-evolving Cryptocurrency sector, Terra looks like a promising contender. It is being embraced by traders and the network expansion is remarkable. As developers work on expanding the number of supported blockchains, Terra user base is expected to shoot up significantly. The fact Do Kwon, one of the co-founders of Terra is a software engineer with tenure in Apple and Microsoft, works in its favor. It has already got the backing of entities like Pantera Capital, Lightspeed Venture Partners, and Arrington Capital.
The upcoming IBC launch will make the network capable of accommodating many more Dapps in its Cosmos ecosystem. With Inter-Blockchain Communication, different blockchains will be able to connect and communicate easily and so the transfer of tokens between varying networks will be a breeze.
Wormhole’s expansion to Terra has also made headlines. This cross-chain bridge lets Terra-native assets like LUNA and UST be transferred to Ethereum, Solana, and Binance Smart Chain under one Unified UI. Do Kwon says the market for Stablecoin will witness massive growth in the near future and so crypto platforms backing these will also grow.