What is Terra (LUNA)?

What is Terra (LUNA)?

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Terra is a decentralized and programmable blockchain platform where stablecoins can be created for use in cross-border payments. Terra has a native coin called LUNA that serves as the staking and utility token, with several stablecoins tied to some of the significant currencies in the world, including TerraUSD (UST).

Terra uses different stablecoins to power transactions, and it ensures instant settlement, reduced transaction costs, and frictionless cross-border trading.

 

Component Terra (LUNA)
Technologies Cosmos Blockchain Technology, multi-peg policies, anchor protocol, mirror protocol
Market capitalization $16.5 billion
Open-Source Yes
Consensus Mechanism Tendermint Delegated Proof of Stake
Smart Contracts Yes
Founders/Authors Daniel Shin, Do Kwon
Launch Date Mainnet launched in 2019
Circulating Supply of Coins 413,760,453
Maximum Coin Supply None
Mining-based Coin? No
Is Terra a Stablecoin? No
Does Terra have a burn rate? Yes
Does Terra have a Whitepaper? Yes, the whitepaper for Terra can be viewed here.

 

Evolution and Development of Terra

Terra was founded in 2018 by Daniel Shin and Do Kwon, and the mainnet for the platform was launched in 2019 to drive the widespread adoption of cryptocurrency. They did this by focusing on price stability and usability, creating the most popular stablecoin blockchain platform in the world.

LUNA is the native token for the Terra blockchain, and it serves as a utility and governance token. LUNA is not a stablecoin, but it works to keep the stablecoins that are created on the Terra blockchain more stable than the different fiat currency pegs.

What makes Terra unique?

Terra is a next-gen blockchain payment network that aims to provide efficiency surrounding payment service providers, subsequently increasing in value for customers. Terra was built using Cosmos blockchain technology, and it is designed to challenge other competitor retail payment applications.

Terra is an end-to-end payment solution that can save payment service providers hundreds of thousands of dollars. In terms of transaction speed, Terra can process up to 10,000 transactions per second, putting it ahead of other competitors such as Bitcoin and Ethereum.

The benefits that Terra offers include the following:

  • Terra is the ideal solution in the digital economy because of its decentralization and permissionless nature
  • Terra offers low-cost programmable payments and reduced transaction fees
  • The infrastructure of Terra makes decentralized applications (DApps) along with the development of stablecoins easier.
  • Terra makes financial management easier by decreasing the need for credit card networks, banks, or payment gateways.
  • Terra offers the ability for the network to function across several chains, with cross-chain capabilities planned
  • There are several different configurations for programmers

What are the main uses for Terra?

The terra blockchain is used to create stablecoins, with LUNA as a key part of the overall system. LUNA is used as a protocol token that reduces the overall volatility of stablecoins that are created on the Terra blockchain.

The stablecoins that are available on the Terra blockchain are:

  • TerraUSD
  • TerraEUR
  • TerraCNY
  • TerraJPY
  • TerraGBP
  • TerraKRW

Terra is used as a global payment system that uses fiat-pegged stablecoins that ensure overall price stability. Terra offers fast and affordable transaction settlement, price stability, and widespread adoption of fiat currencies that are permissionless and immune to censorship.

The LUNA token is used in the following ways:

  • Security and Governance because of the Tendermint consensus, driven by a Delegated Proof of Stake (DPoS) where validators run full network nodes that provide overall network consensus and add new blocks, with these validators rewarded in LUNA tokens.
  • The stabilization of stablecoin prices to a peg – with a 1:1 peg between TerraUSD and the US dollar, TerraEUR and the Euro, TerraGBP and the pound, and so on. These stablecoins are stabilized by LUNA, and the algorithm used restores the peg when it drifts away from the 1:1 by either minting new coins or by burning coins.

What is the future potential for Terra?

Terra is currently working towards becoming the main e-commerce stablecoin payment system as well as a comprehensive decentralized finance (DeFi) provider in the world. Terra has a unique proposition that is contributing to the widespread adoption of blockchain technology, especially in Asia and Korea.

Terra features a discount model alongside instant transaction settlement and low fees. Terra has a significant amount of potential by providing a simple approach to application and blockchain development.

Price analysis on Terra

Terra was initially launched in 2019, and its price analysis over the past 3 years are indicated as follows:

 

  2019 2020 2021 to date
LUNA Price High $1.38 $0.66 $54.61
LUNA Price Low $0.21 $0.12 $0.63
Market Cap $170.3M $232M $24.04B

 

Price prediction on Terra

Terra resembles hope and convenience, aiming to simplify the lives of users around the world by offering cheap, frictionless, and permissionless digital payments. Terra’s initial phase did not see much acceptance, and it took time for trust to be formed around Terra.

However, between 2020 and 2021, Terra and LUNA saw quick adoption and a boost to its value, with the following short-term and long-term predictions on the coin:

  • Terra is expected to settle on a price of $46 by the end of 2021
  • The price is predicted to settle on $35 to $50 by the end of 2022
  • Terra is expected to trade at $200 by the end of 2026, providing investors with a return on investment of more than 1,000%

Which wallets are the best option for storing Terra?

Simply defined, a Terra wallet is a piece of software where users store the necessary data to access their Terra (LUNA) funds. This data contains a private key, which is like a password, and a wallet address, also known as a public key, which acts as an account number.

In terms of the types of Terra wallets, users can distinguish between the following:

  • Cold Wallets – which are offline wallets that store funds in an application that is not connected to the internet.
  • Hot Wallets, which are online applications that require an internet connection.
  • Physical wallets are unique pieces of hardware like USB devices that keep crypto funds offline.
  • Web wallets are web browser ad-on wallets.
  • Desktop wallets – which are applications that allow users to manage their finds on macOS, Microsoft Windows, or Linux.
  • Paper wallets, which is a piece of paper with a code or QR code on them, to access the assets, the user enters the key or scans the code to access their account.

The best wallet options for LUNA are:

  1. Terra Station
  2. Ledger Hardware Wallets
  3. Math Wallet
  4. Keplr Wallet
  5. Trust Wallet

 

      1. Terra Station

Terra Station is the official Terra LUNA wallet where users can store and manage their LUNA. One of the best features of this wallet is that it is non-custodial, which means that the private keys of users are not kept on the server of the provider.

The main features of Terra Station are as follows:

  • It can connect to DApps such as Mirror, Anchor, and Terra Swap
  • It can be used in the staking of LUNA
  • Users can easily view their transaction history and recover their seed phrases
  • Users can swap or convert their tokens to fiat currency
  • It provides the best access to several smart contract interfaces

 

      2. Ledger Wallets

Ledger produces hardware wallets that are USB devices where cryptocurrencies can be stored offline. Terra LUNA is supported by several devices, and users can easily store, send, and interact with Terra LUNA along with other cryptocurrencies.

Two of the best Ledger wallets that support LUNA are Ledger Nano S and Ledger Nano X.

 

      3. Math Wallet

Math Wallet is another LUNA-compatible wallet where users can store and interact with a wide range of other cryptocurrencies, tokens, and DApps. Math Wallet supports mobile, web, and browser extensions, and it can be used alongside hardware wallets.

Some of the main features of Math Wallet are as follows:

  • It facilitates the sending and receiving of tokens
  • Allows users to access blockchain information
  • It allows users to manage their blockchain resources
  • It offers improved portfolio management

 

      4. Keplr Wallet

Keplr is an open-sourced browser extension wallet that supports the Cosmos interchain ecosystem, allowing for account and wallet management for all Cosmos-SDK-based blockchains such as Terra. With the Keplr wallet, LUNA users can use a wide range of cryptocurrency assets to transact, stake, and perform several other functions.

 

      5. Trust Wallet

The Trust wallet supports LUNA among several other cryptocurrencies. With Trust Wallet, users are in complete control of their funds, and users can send, receive, store, and exchange LUNA in the application.

Where can you buy Terra?

Terra can be bought from the following exchanges:

  1. Binance
  2. OKEx
  3. KuCoin
  4. Huobi Global
  5. Bithumb Global

 

      1. Binance

Binance has been in operation since 2017, and it is a popular Malta-based cryptocurrency exchange that provides users with 150 different coins that can be bought, sold, and exchanged. Binance offers fast and innovative mobile trading apps, desktop platforms, and web extensions that can be used across all devices.

The Binance trading platforms also feature an innovative and comprehensive educational advantage, providing users access to a dedicated training academy. Users also have access to vast analysis capabilities.

 

PROS CONS
Offers more than 150 cryptocurrencies Only offers crypto trading
Fast and flexible trading platforms Does not accept fiat deposits to buy crypto
Educational tools are provided No US clients allowed
24/7 customer support offered in multiple languages Unregulated

 

      2. OKEx

OKEx was established in 2014, and it provides competitive trading conditions, including variable spreads, low commission charges on trades, and leveraged crypto trading with leverage ratios up to 1:100.

OKEx also offers a wide range of cryptocurrencies that can be traded through web-based trading and mobile trading platforms 24/7.

 

PROS CONS
Low minimum deposit Unregulated
Decent selection of educational material Only offers crypto-to-crypto trading
Offers a selection of trading platforms US clients are not accepted
A wide range of crypto supported

 

      3. KuCoin

KuCoin was launched in 2017, and it is a Hong Kong-based exchange that offers users access to a wide range of cryptocurrency coins and tokens that can be traded using the proprietary trading platform of KuCoin.

KuCoin offers a wide range of trading tools as well as educational materials that can be used, with the benefit that crypto trading can take place 24/7. KuCoin is well-known for its competitive fees and fast trade executions.

 

PROS CONS
Intuitive trading platforms available across devices Unregulated
24/7 trading and customer support US clients are not accepted
Multiple cryptocurrencies are supported
Educational material offered

 

      4. Huobi Global

Huobi Global is a well-established cryptocurrency exchange trading platform that was launched in 2013. Huobi offers variable spreads and leveraged trading of up to 1:3. Huobi offers users access to more than 234 cryptocurrencies that can be exchanged and traded.

 

PROS CONS
Advanced trading platforms provided Unregulated
A wide range of trading tools and educational resources provided US clients are not accepted
24/7 dedicated customer support provided

 

      5. Bithumb Global

Bithumb Global is a South Korean cryptocurrency exchange that has been in operation for the past 7 years, offering variable spreads and leverage up to 1:5. Bithumb is a global financial platform and leading digital financial innovation that offers over 106 cryptos that can be traded.

There is 24/7 customer support offered, and Bithumb also offers the use of a powerful proprietary trading platform through which cryptos can be exchanged.

 

PROS CONS
Competitive fees and commissions Unregulated
There are multiple auto-trading tools offered There are limited funding options
Users have access to several cryptocurrencies Only offers crypto trading, no CFDs or forex instruments
Bithumb is a dedicated crypto brokerage and exchange

 

Does Terra use coin burns?

Yes, Terra burns LUNA.

Coin burning in cryptocurrencies means that some of the coins of native crypto or another currency are sent to a public address from which those coins cannot be spent because the private keys of the address cannot be obtained.

The function that coin burns serve are:

  • To make new tokens or coins through Proof of burn
  • To reward the token or coin holders
  • To destroy unsold tokens or coins after an Initial Coin Offering (ICO) or a token sale.

 

The importance of and the reason why coin burns are necessary are as follows:

  • Long-term adherence – coin burns encourage long-term commitment and the time of the project. This enables greater price stability for coins, especially considering investors who do not want to sell or spend their Ethereum.
  • It protects against spam – the coin burn mechanism naturally safeguards against Distributed Denial of Service Attack (DDOS), preventing spam transactions from clogging the network.

LUNA is minted to match Terra offers, which moves volatility from the price of Terra to the supply of LUNA. The system will burn a certain portion of LUNA that is earned during expansions until the overall supply of LUNA reaches a 1 billion equilibrium issuance.

Should there be an increased demand for Terra, the system automatically mints coins, and LUNA is earned in return, a process that is known as seigniorage. The value of the newly minted coins is subtracted from the cost of issuance, and by burning a portion of LUNA, mining power is extremely rare. Any remaining seigniorage is diverted to fund fiscal stimulus.

When the economy grows because of the burn rate, the LUNA supply will decrease, and it also increases when the economy shrinks.

Another side of the coin burns relates to transaction fees and the burn rate, with the two being used by the overall protocol to ensure that fluctuations in unit mining rewards can be kept stable. The LUNA burn rate and fee adjustments absorb the expected volatility in mining rewards.

Are there criticisms against Terra?

Terra currently struggles with the following criticisms:

  • The issue surrounding Govcoins. Countless governments around the world are approaching the process involved with creating proprietary digital government currencies. These Govcoins will be the digital version of conventional fiat currencies, but they will be centralized and backed by the government. They will be more stable, and they will have fewer risks. This poses a large threat to currencies such as LUNA.
  • With continuous expansion, Terra can become a digital borderless digital bank, and regulators want to avoid this. The concern that surrounds this type of technology is that stablecoins and DeFi could overthrow monetary systems.
  • Terra faces the challenge involved with scaling.

What is Terra’s largest Competitor?

Ethereum is the largest competitor of Terra.

Terra was launched as a next-gen blockchain payment platform that caters specifically to the e-commerce industry in Asia to increase productivity for payment service providers while simultaneously ensuring high value for customers as well.

Ethereum, on the other hand, is a decentralized, public, and parallel processing network where smart contracts and DApps can be created and launched. Ethereum is the largest programmable blockchain where thousands of DApps are launched, including other blockchain projects.

The main advantage of Ethereum is that it is the go-to platform for DApp and smart contract development.

The similarities between Terra and Ethereum relate to:

  • Their marketplaces are where users can buy, sell, trade, stake, and exchange these cryptocurrencies across different exchange trading platforms.
  • They both have native tokens that serve a variety of purposes.
  • They are both programmable blockchains that can host applications.
  • Both projects support smart contracts.
  • Both networks burn their native tokens.

The differences between Terra and Ethereum relate to:

  • Market Cap – The market cap for Ethereum is over $470 billion, while Terra is just over $16 billion
  • Consensus – Ethereum currently uses a Proof of Work where coins are mined to validate transactions and secure the network. Terra uses a PoS Tendermint consensus where coins can be staked.
  • Transaction fees on Terra are significantly lower than the gas fees that Ethereum charges.
  • Transactions per second – Terra can process up to 10,000 transactions per second, whereas Ethereum can only process 13 per second.

What is the Staking Process involved with Terra?

The Terra blockchain is secured by a PoS consensus where users can stake their LUNA as collateral to validate transactions. These validators then receive rewards according to the amount of LUNA that they staked on the platform.

LUNA holders can also choose to delegate their staking rights to other validators, allowing them to validate transactions on their behalf, with both parties sharing the revenue that is generated from this process.

What can Example smart contracts do?

A smart contract can simply be defined as a program that runs on the Solana platform and ecosystem. Smart contracts consist of a collection of codes, which are its functions, and data, which is its state, that all reside at a specific address on the Solana blockchain.

Smart contracts are not controlled by the user. They are deployed to the network and subsequently run as they were programmed.

Smart contracts can define certain rules, like any typical contract, and these rules are automatically enforced through the code. Smart contracts cannot be deleted, and the interactions with them are irreversible.

In terms of necessity, smart contracts are important because they help to solve the issue associated with mistrust between different parties as well as business partners.

Smart contracts have several advantages for many industries, and they can reduce unnecessary costs as well as time expenditure while simultaneously enhancing transparency.

Smart Contracts can be used across several industries, including:

  • Mortgage Contracts
  • Digital Identity
  • Financial Data Recording
  • Supply Chain Management
  • Protecting Copyright Content
  • Insurance, and many others.

Smart contracts allow users to extend the capability of the overall Terra blockchain. This is done by introducing customized logic that can be composed against several financial primitives native to the Terra blockchain.

This is made possible because of the stablecoins that are available in any fiat currency in addition to a robust oracle feed and on-chain atomic swaps.

The reasons why developers are flocking to develop projects on Terra’s blockchain relate to the following:

  • Terra features robust consensus in addition to fast block finality because of the Tendermint BFT consensus and the use of DPoS, which is driven by 100 top validators.
  • Terra’s blockchain has a fundamental infrastructure that consists of price oracles, on-chain swaps, stablecoin assets, community governance, and more. Terra also has an automated multi-monetary fiscal policy.
  • Terra has an extremely active user base that consists of more than 1.5 million users.

Can blockchains be hacked? Has Terra ever experienced any hacks?

Yes, Blockchains can be hacked. However, Terra blockchain has never experienced any hacks.

Is Terra a Good Investment?

Yes, Terra is a very good investment.

LUNA’s technical indicators show that there is a strong bullish pattern that is forming. The price stability surrounding LUNA cannot be found in many other cryptocurrencies. The protocol that keeps LUNA’s price stable automatically improvises the supply of the coin as demand for it changes, making LUNA a safe option for investors who want to avoid high volatility markets.

What is the supply and distribution of Terra?

Terra has a circulating supply of 413,760,453 [2021/11/19], with this number changing as coins are minted and burned to keep the price stable.

  • Fixed or maximum supply can be defined as the total number of coins that can ever be in circulation.
  • Total Supply refers to the number of coins that have been mined, including the missing coins that are no longer in circulation or that have been lost.
  • Circulating supply refers to the total number of coins that are in circulation.

 

In terms of Unlimited Supply, cryptocurrency coins are inflationary, which means that the coins will inevitably lose value as supply increases, with demand decreasing as a result.

Cryptocurrencies that have a limited supply are deflationary, which means that the coins that are in circulation will gain value over time as demand surpasses supply.

 

Is Terra a viable Alternative Coin?

Yes, Terra is a good alternative coin in terms of the following:

  • Traceability – transactions are recorded on a public ledger without divulging the identity of users.
  • Hacking – Terra’s blockchain has not experienced any attacks.
  • Security – The unique technology that Terra uses ensures that it is completely safe.
  • Transaction Speed – Terra can process up to 10,000 transactions per second.
  • Technology – Terra has unique and robust technology that is driving acceptance and widespread adoption of blockchain technology.
  • Price Stability – LUNA has some of the best price stability because of the smart contracts used to mint/burn coins as demand rises and falls.
  • Potential Investment – Terra is a very good investment for beginner and professional traders and investors.
  • Popularity – Terra is part of the top 20 alternative coins.
  • Future Uses – Terra has a bright future ahead of it as a popular blockchain-based payment platform.

What are the differences between Terra And Bitcoin?

Bitcoin is the original cryptocurrency that was created in 2009, after which over 14,000 alternative coins were created. Bitcoin has the highest market capitalization in the world, and it is used as a medium of exchange and a store of value.

Terra is a blockchain platform where stablecoins can be created, and it serves as a medium of exchange and a store of value, boosting the adoption of blockchain technology by offering a fast, cheaper payment platform.

While Terra sees widespread adoption, Bitcoin is still the king of all cryptocurrencies.

 

  Bitcoin Terra
Price change 20/21 +$400% +6,000%
Market Cap $1.1 Trillion+ $16.5 Billion+
Past Hacks None None
Popularity Very High Very High
Altcoin Rank #1 – Original Crypto #13

 

What are the differences between Terra and Ethereum?

The differences between Terra and Ethereum relate to:

  • Market Cap – The market cap for Ethereum is over $470 billion, while Terra is just over $16 billion
  • Consensus – Ethereum currently uses a Proof of Work where coins are mined to validate transactions and secure the network. Terra uses a PoS Tendermint consensus where coins can be staked.
  • Transaction fees on Terra are significantly lower than the gas fees that Ethereum charges.
  • Transactions per second – Terra can process up to 10,000 transactions per second, whereas Ethereum can only process 13 per second.

Ethereum is used for the creation of different smart contracts, and while both Terra and Ethereum work towards the same goal, Ethereum is the strongest contender of the two. Terra is still the most popular platform where stablecoins can be created and launched.

 

  Ethereum Terra
Price change 20/21 +880% +6,000%
Market Cap $479 Billion+ $16.5 Billion+
Past Hacks None None
Popularity Very High Very High
Altcoin Rank #2 #13

 

What are the differences between Terra and Dogecoin?

Terra is a programmable blockchain that was created by Terraform Labs, powering different cryptocurrency and financial app start-ups. Dogecoin was initially created as a joke but now serves as a medium of exchange on social platforms to tip content creators.

Terra aims to lessen volatility associated with the cryptocurrency market, and it is pegged to major currencies that ensure that the price remains stable by using smart contracts. 

 

  Dogecoin Terra
Price change 20/21 +7,300% +6,000%
Market Cap $29 Billion+ $16.5 Billion+
Past Hacks None None
Popularity High Very High
Altcoin Rank #10 #13

 

What are the differences between Terra and Neo?

While both Terra and Neo employ smart contracts and both blockchains are programmable, NEO focuses on becoming compliant with regulation. Neo is separated from Terra and other blockchain projects through its “Digital Identity,” making it the perfect platform to be used by regulated entities who want to adopt and use cryptocurrencies.

 

  NEO Terra
Price change 20/21 +160% +6,000%
Market Cap $2.90 Billion+ $16.5 Billion+
Past Hacks None None
Popularity Medium Very High
Altcoin Rank #57 #13

 

What are the differences between Terra and NFTs?

Non Fungible tokens (NFTs) are digital assets that each have a unique value, with no two NFTs holding the same characteristics or value as another. Terra, on the other hand, is fungible, which means that one LUNA has the same value and characteristics as another LUNA.

What are the differences between Terra and Solana?

Terra is a thriving payment network that is supported by several stablecoins that are pegged to major currencies such as USD, JPY, CNY, GBP, and KRW. Solana is a blockchain platform that is programmable and that allows for DeFi and DApps to be built and launched. 

The unique feature of Solana is that it can process up to 50,000 transactions per second, making it a competitive alternative to other payment networks. However, Solana and Terra have teamed up to start building a token bridge where Terra stablecoins can be transferred onto the DApp ecosystem of Solana, creating a unique and strategic partnership between the two projects.

 

  Solana Terra
Price change 20/21 +9,300% +6,000%
Market Cap $59.35 Billion+ $16.5 Billion+
Past Hacks None None
Popularity Very High Very High
Altcoin Rank #6 #13

 

What are the differences between Terra and Cardano?

Cardano is next in line to become one of the largest alternative coins and programmable blockchains in the industry. Cardano features powerful technology that is often compared to that of Ethereum, making it one of the most popular alternative options with lower transaction fees and higher capability.

Cardano is considered the better of the two blockchains because of its capabilities, while Terra is the preferred option where stablecoins can be developed.

 

  Cardano Terra
Price change 20/21 +2,100% +6,000%
Market Cap $59.54 Billion+ $16.5 Billion+
Past Hacks None None
Popularity Very High Very High
Altcoin Rank #5 #13

 

What are the differences between Terra and Avalanche?

Avalanche is a direct competitor to Ethereum, and it is used to develop and launch DeFi applications. Users use AVAX, the native token of Avalanche, to pay for services and transactions. Avalanche is currently the fastest smart contracts platform according to its time to finality, with blocks being verified within a second.

Terra is not focused on being the fastest but being the most stable platform where stablecoins can be created, pegged to major currencies. Terra uses some of the most robust technology to ensure that its price can remain stable in volatile market conditions.

 

  Avalanche Terra
Price change 20/21 +2,500% +6,000%
Market Cap $22 Billion+ $16.5 Billion+
Past Hacks DApp hack (Vee Finance) None
Popularity High Very High
Altcoin Rank #12 #13

 

What is the difference between Terra and Terraswap?

Terraswap is a cryptocurrency exchange trading platform and liquidity provider on the Terra blockchain. Terraswap provides ample liquidity to users as well as the variety of DeFi applications that are launched and run on the Terra blockchain.

Terraswap aims to empower developers, liquidity providers, and traders by offering a comprehensive financial marketplace that is easily accessible to everyone. 

Can Terra and Terraswap coexist?

Yes, Terra and Terraswap work together to provide a central marketplace where developers, liquidity providers, and traders can trade and exchange digital assets.

Is Terra a Stablecoin?

No, Terra is not a stablecoin.

Terra is a programmable blockchain where stablecoins can be created and launched. There are several Terra-pegged stablecoins in circulation, including the following:

  • TerraUSD
  • TerraEUR
  • TerraCNY
  • TerraJPY
  • TerraGBP
  • TerraKRW