Terra is a Terraform Labs blockchain project that underpins the company’s coins and financial products. The Terra U.S. Dollar, or UST, is a cryptocurrency linked to the US dollar via an algorithm. It is a stablecoin that aims to decrease the volatility that characterizes cryptocurrencies such as Bitcoin. Many traders turn to online cryptocurrency exchanges like Bitcoin Prime for investments in stablecoins. To create new UST tokens, a portion of another digital token and reserve asset, Luna, is “burnt.” And demand for UST grows as more people use the currency, more Luna will be burned. To some extent, such a balancing effort is meant to help stabilize the price.
Terra’s inception began in January 2018, and the mainnet launched in April 2019. Its native token, LUNA, is used to maintain the protocol’s stablecoins’ prices stable. Terra offers several stablecoins, including the Terra U.S. Dollar, Euro, Canadian Dollar, and Japanese Yen. As of September 2020, it supplied stablecoins pegged to the US dollar, South Korean won, Mongolian tugrik, and the IMF’s Special Drawing Rights group of currencies.
They’ve grown in prominence due to the benefits of cryptocurrencies, such as quick, low-cost, and simple transactions without price volatility. On the other hand, regulators have them on their radar since these currencies are beginning to operate like unregulated banks.
Daniel Shin and Do Kwon, the CEO and co-founder of Ticket Monster (TMON), established Terra in January 2018. The initiative was created as a method for the two to accelerate the adoption of blockchain technology and cryptocurrencies by focusing on price stability and usability. Kwon was formerly the CEO of Anyfi, a company that offers decentralized wireless mesh networking solutions. He’s also worked for Apple and Microsoft.
Terraform Labs is a South Korean business that earns profit from cryptocurrency transfers. HashKey Digital Asset Group, Divergence Digital Currency Fund, and Huobi Capital were among the investors that contributed $57 million. The funds received are in addition to a $150 million financial pledge made on July 16th. Kwon Shin, the CEO of Terraform, claims that many Koreans have utilized the service to purchase theatre tickets using Terra money.
How It Works
The project aims to differentiate itself by employing fiat-tied stablecoins. Its one-to-one peg is maintained by an algorithm that adapts stablecoin supply in accordance to demand. Terra has partnered with a variety of payment systems, notably in the Asia-Pacific area. It established a partnership with Chai, a South Korean mobile payments app, in July 2019 that would see transactions made through the app on e-commerce platforms processed through the Terra network.
Its coins are called algorithmic stablecoins and are backed by the LUNA token. They use a central bank or pool of tokens controlled by smart contracts to maintain the price. If the price of UST rises above one dollar, the algorithm will use LUNA to mint more UST and reduce the price if it falls below one dollar. The token is critical to the stability of Terra’s stablecoins, and token owners can stake the token to be compensated for enduring volatility.
Is It Worth It?
According to RBF Capital, Terra’s stablecoins may capture 20 percent of the market by 2025. Terra is headquartered in South Korea, which has already tightened rules this year. Central bank digital currencies might eliminate the requirement for stablecoins in many cases. Terra will become the type of borderless digital bank that regulators are attempting to avoid if it continues to grow. Terra, the world’s largest mobile phone network, is extending its operations in South Korea and intends to do so much more.
The business has already expanded its network to Singapore and plans to do so even more globally. We want to make a difference in the lives of millions of people throughout the world, Terra. Terra aspires to create a positive impact on the lives of millions of people all around the world.
It is to be noted that as bullish as the LUNA token is at the time of writing, the market volatility may change within just 24 hours so it’s best for investors to monitor the market prices while making the decision to invest.