An Insight Into Terra (LUNA)

By Aleksandra Wilson
3 min read September 30, 2021

What Is It?

Terra is a protocol for blockchain that uses stablecoins to enhance the price-stable payments system around the world. It claims to mix the resistance of BTC with the adoption and the stability of prices of fiat currencies. Therefore, it’s allowed to offer settlements that are affordable as well as fast. The development of the protocol that would end up being called Terra began in early 2018, and it was launched in April of the following year. To the day of writing this article, the protocol offers different stablecoins pegged to various fiat currencies.

Some of the fiat currencies pegged to those stablecoins are the USD, the Mongolian tugrik, the South Korean won, and it plans to keep adding options. Naturally, it has a token called LUNA, which is used to stabilize the price of the stablecoins of the protocol. The holders of the token can also vote as well as submit governance proposals. 

About The Founders of Terra

Terra was founded in January 2018, with Daniel Shin and Do Kwon in charge of developing the project. They conceived the protocol’s project as a way to ride the wave of the fast adoption of crypto and blockchain technology. They did that with a particular focus on the stability of price and usability. Do Kwon was the one to take the CEO position of the company behind Terra, called Terraform Labs. Before getting involved in the Terra project, Shin was involved in other tech projects, such as TMON and Fast Track Asia. As for Kwon, he had founded Anyfi and worked in Apple and Microsoft as a software engineer.

What Makes It Different?

Terra’s primary goal is to be different by using stablecoins that are pegged to fiat currencies. They aim to do that by combining the benefits of crypto with the stability that fiat currencies have at their prices. Their algorithm keeps the 1:1 peg that adjusts the stablecoin supply automatically based on the demand. In mid-2019, they announced that they were partnering with Chai, a mobile app for payments based in South Korea. For every transaction, the trader is charged 2-3 percent fee on average.

How Many LUNA Coins Are In Circulation?

As of the day of writing this article, Terra had 1 billion coins in circulation. Firstly, in case that amount is exceeded, the token is burned until it goes back to its supply level of equilibrium. All new LUNA coins get issued through the algorithm to keep the stability on the price of stablecoins in Terra.

Security

The blockchain is secured by a PoS consensus algorithm that is based on Tendermint. The holders of the token can delegate other users to validate transactions by sharing the generated revenue. Not long after the mainnet of Terra went live, the firm CertiK performed a security audit of the network. What they do, in simple terms, is to examine the economic model and test it against manipulation of the market, the coding language, and its architecture. The results from the said audit were positive in general.

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