- A look into Terra (UST) coin.
- Luna and Terra coins.
- Advantages of holding Terra coin.
- Past present and future prices.
Terra is a public blockchain protocol.
Terra is a public blockchain protocol that deploys a suite of algorithmic decentralised stablecoins which underpin a thriving ecosystem which brings decentralised finance to a large number of users. Terra assets are supported by leading blockchains.
Stablecoins are coins whose value is pegged to a cryptocurrency, fiat currency or to exchange-traded commodities.
Terra USD was created in January 2018 and was launched in late 2021. Terra has a market cap of $4.391 Billion, a circulating supply of 407.49 million with no maximum supply.
Terra is the leader of decentralised and open-source publics blockchain protocol for algorithmic stablecoins
Terra is the leading decentralised and open-source public blockchain protocol for algorithmic stablecoins. The protocol uses a combination of open market arbitrage, incentives and decentralised oracle voting. With this combination, Terra makes stablecoins that track the price of any fiat currency.
The Terra ecosystem is a rapidly expanding network of decentralised applications, creating a demand for Terra and pushing Lunas price up.
Terra is an industry-leading decentralised stablecoin reflected by $USDT. It has a vibrant Smart Contracts platform. Terra has a thriving cross-chain DeFi environment. Terra is built on the Cosmos SDK & Tendermint consensus.
Terra and Luna: the 2 main coins of the protocol.
- Luna is Terra’s native staking coin which absorbs the Terras price volatility. Luna is used for mining and governance.
- Users stake Luna coins to validators who then record and verify transactions on the blockchain in exchange for rewards from transaction fees.
- The more Terra is used the more Luna is worth.
- Luna provides its holders with staking rewards and governance power.
- Terra stablecoins track the price of fiat currencies:
- Users make new Terra coins by burning Luna.
- Terra and Luna are always tradeable at a 1:1. 1 USD can be traded for 1 UST.
Stablecoins and Terra:
The main feature of the Terra protocol is its stablecoins, the TerraUSD coin can be used like fiat currency with added blockchain benefits: lower fees, faster settlement processing times, instant transactions and unchangeable public ledger.
If stablecoins maintain their price pegs they are considered valuable. Terra protocol determines the price of the Terra coin using the basic markerket forces of supply and demand - when demand is high, supply is low and therefore the price increases. The protocol keeps the price stable by ensuring supply and demand is balanced.
Terra protocols algorithmic market module helps to keep the price stable, which incentivises the burning of Terra through arbitrage opportunities. Arbitrage refers to the making of money on an asset through price differentials between markets.
Scalability of Terra:
Terras protocol is scalable, which is designed to maintain Terras price stability regardless of volatility, demand or market size.
Scalability refers to the ability of Terra’s protocol to receive a large influx of transactions at a time.
Terra offers rewards for holding the coin
Terras protocol incentivises validators and delegators with staking rewards, in the form of gas and swap fees
- Gas: to avoid spamming, fees are computed onto each transaction. Validators have the power to add minimum gas prices and reject transactions that have implied gas prices below their set level of.
- Swap fees: tobin tax refers to the fee for swapping Terra UST stable denominations. Spread fees refer to the price discrepancy between Terra and Luna. The swap fees are directed to the Oracle reward pool, which are then distributed over two years to validators who faithfully report correct Oracle prices.
Advantages of holding Terra UST
There are many advantages of holding Terra coin, it is decentralised and permissionless which makes it ideal for the economy.
- Interoperability: this means it is able to run on multiple chains. Terra is live on Ethereum and Solana with plans of expansion in the future.
- Programmable: development focused agenda, which allows programmers to build smart contracts in Rust, Go and Assemblyscript. Oracles are off-chain sensors that have the ability to communicate data to-and-from the blockchain.
- Streamlined Financial: Terra aims to reduce or completely remove the need for credit card networks, banks and payment getaways with a single blockchain layer.
The Sustainability Of Terra
Terras coin uses a proof-of-stake model, which means validators verify transactions based on the number of coins they hold. Proof-of-stake models are less energy intensive than some competing models.
Past, present and future price movements
Terras price has been stable in the past thanks to its market module based on supply and demand. However, investor fears around the general state of the market has been causing the crypto market to see sufficient drops in prices.
Investors see the future price of Terra to see substantial increases in the future when markets start to normalise.
Terra USD Price Chart
Sources: coinwut.com, finance.yahoo.com, terra.money, securities.io, investorplace.com