What is Terra LUNA? A Quick Guide for Beginners

What is Terra LUNA?

Terra LUNA is a blockchain protocol that uses fiat-pegged stablecoins to power price-stable global payments systems.

According to its white paper, Terra combines the price stability and wide adoption of fiat currencies with the censorship-resistance of Bitcoin (BTC) and offers fast and affordable settlements.

Terra’s native token, LUNA, is used to stabilize the price of the protocol’s stablecoins. Terra was founded in January 2018 by Daniel Shin and Do Kwon. The Terrapin Engineering token (TER) is Terra’s native token.

It acts as the transacted currency within the Terra protocol. The TER is represented in the Terra Protocol as the price of a stablecoin. This means that Terra’s native tokens and stablecoins trade at the same rate.

  • Terra Symbol: LUNA
  • Rank # 12
  • Terra Supply: 1 Billion tokens

How does Terra LUNA work?

The base Terra protocol includes three phases: Terra, Terra+, and Terra (REX). In each phase, Terra is the transaction engine and regulatory control point, Terra+ is the payment system (applications), and Terra (REX) is the token.

Each phase is interconnected and mutually interactive. In the first phase, Terra, Terra+, and Terra (REX) are interlinked through transactions. However, these tokens are not used to purchase a product. It is rather a way to convert one cryptocurrency into another.

Next, users purchase new tokens through Terra (LUNA), the native token of the Terra protocol. With the integration of Terra LUNA, the value of cryptocurrencies is stable. By following a “one coin to token exchange” model, transactions on Terra (LUNA) can be completed and fees are reduced.

What are the benefits of using Terra LUNA?

● Terra LUNA is designed to help regular people and organizations access real-world services and applications with high levels of security and privacy.

● Terra’s three-pronged approach to settlement can mitigate government interference and censorship risks.

● Terra offers a suite of stablecoins with a wide range of functionality, from stable interest rates and payments to digital asset transfer and prediction markets.

● Terra LUNA offers a global, flexible, and constantly updated set of products, services, and blockchain-powered applications. On January 25, Terra will begin the first phase of its Initial Coin Offering, raising $10 million to develop the Terra protocol. Terra will be available on major exchanges such as Binance and Huobi during this period.

Who is the team behind Terra LUNA?

Daniel Shin is the founder of Terra, and Do Kwon is the head of community and product development at Terra. Terra is a project started by Daniel Shin, who also founded a pre-sale for that failed startup, the now-defunct Starta Venture Fund.

Terra will be available on the Ethereum Mainnet (ETH) and Terra-Core will be hosted on MetaMask. Do Kwon previously held a lead engineer role at ACINQ and a software engineer role at Swarm and BitGo. LUNA is the native token of Terra.

The other stablecoins will be pegged to the Ethereum ETH Classic token, XEM. The LUNA token is pegged to the price of the stablecoin that is traded on the Terra marketplace.

Comparing Terra LUNA with other blockchain protocols

Terra aims to be the next-generation global payment system. A peer-to-peer system of applications built on the Ethereum blockchain. The protocol’s main network is based on Tendermint, which provides anonymity and high-speed settlement for a diverse group of users.

The payment system uses the stablecoin NEO to stabilize the network and develop a trustworthy market. But as Terra’s whitepaper points out, there are already several other stablecoins in the market.

There are also platforms that offer free and fast settlements but have not established an ecosystem with users. Terra hopes to be different because it’s open-source and has a team that has deep experience with blockchain projects.

How Terra LUNA is unique?

Terra is seeking to distinguish itself by its use of stablecoins pegged to fiat It claims it is able to combine the advantages of cryptocurrency that are completely borderless alongside the daily price stability associated with fiat currencies. 

It maintains its one-to-one peg by using an algorithm that adjusts the stablecoin supply in accordance with its demand.

It achieves this by encouraging LUNA holders to exchange LUNA and stablecoins at profit exchange rates, when necessary, in order to either increase or reduce the supply of stablecoins to meet the demand.

Terra has established a variety of partnerships with payment services, especially within the Asia-Pacific region. 

In July of 2019, Terra announced an alliance together with Chai which is a South Korean-based mobile payment application where purchases made through the app through e-commerce platforms will be processed through the Terra blockchain network. Every transaction is subject to an average of 2% to 3% which is charged to the seller.

Additionally, Terra is supported by the Terra Alliance an organization of companies and platforms that are advocating for the use of Terra. 

In February of 2019, the company made the announcement that online marketplaces from 10 countries, with a combined user number of over 45 million with an estimated value that was $25 billion were part of this alliance.

How you can buy Terra LUNA?

Users can buy Terra LUNA from the following exchanges:

  • Binance
  • OKEx
  • Huobi Global

Conclusion

Last week, we introduced 15 blockchain companies that are disrupting financial markets through disruptive blockchain technology.

This week, we have condensed this list into 4 categories: Sustainable Blockchain Projects – Projects that aim to reduce energy consumption and increase carbon offsetting.

Crypto Asset Investments – Initiatives that offer crypto-token investments for retail and institutional investors. Cryptocurrency Investments – Investments and activities related to cryptocurrency. Natural Resources Ecosystems – Initiatives that are leveraging the blockchain to improve governance, management, and accountability of natural resources.

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