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Full Review Of Terra LUNA Currency

Cryptocurrency payments are still too uncomfortable and difficult to street-level use, main reasons –  high volatility and low interaction with the “real” world.  Terra’s developers decided to solve this problem and even challenge outdated giants like Paypal. How have they dealt with the major problems of cryptocurrency payments?

What is a Terra?

The Terra project was first announced in early 2018 as a universal payment system that make the cryptocurrency truly user-friendly and popular. In April 2019, a working version of the network was launched on the Ethereum blockchain. 

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The main idea of the platform is to create a decentralized network for fast and scalable payments linked to stable currencies. Developers have approached this problem in a very unusual way and have managed to overcome the key disadvantage of the already existing stablecoins:

  • centralization;
  • low scalability;
  • unstable course.

How this was achieved will be discussed below. 

Terra ecosystem

Terra with a Luna’s native token is a well-known cryptoproject and ranks 25th position in the capitalization rating of Coinmarketcap. As a payment network, Terra is almost unknown in Europe or the United States, but is quite popular in Asia, where it has already integrated into:

  • Chai –  South Korean e-commerce application for the payment of goods and services;
  • Meme Pay –  Mongolian messenger that can be paid at many places and shops in the country.

On the official website, developers report that they plan to compete with outdated pay systems such as Alipay and Paypal, maybe is a reason why they started their expansion from Asia. Also It is true that the dollar stablecoin was only announced on Terra last August, so the network is only exploring the western markets. 

Terra is positioning itself as a multichain protocol, so it does not limit only with Ethereum. The developers are already preparing to implement the Dropship solution, which should allow Terra to migrate to other blockchains. For now, Solana and Algorand are the team’s top priorities. 

Terra payment solutions

So, Terra has set the goal of creating a payment system with stablecoins and all the advantages of truly decentralized networks (not like in yet existing stablecoins). The main innovations of Terra are:

  • Automatic balancing number of stablecoins based on customer demand;
  • The creation of a balancing token Luna that would eliminate the exchange rate fluctuations that we see, for example in the “stable” DAI coin.

The Luna Balancing Protocol and the Luna Token are interconnected and work in the following way

  • For emission of stablecoin, a certain amount of Luna must be staked;
  • The amount of coins available for emission depends on the Luna exchange price expressed in the desired currency (for example, if Luna costs $2.5, then 1 staked LUNA allows emit of 2.5 Terrausd). 
  • The higher the demand for the network, the higher the price of the LUNA token, so more dollars can be minted for one native token. So when demand increases, supply increases and instead.
  • LUNA’s upward trend in demand is limited to a fixed supply of 1 000 000 tokens. If emitting more tokens than limits, the protocol automatically burns it until it returns to a fixed number. 

In this way, LUNA token takes over all price fluctuations, ensuring the absolute stability of dollars and other stablecoins, even with growing demand. 

With regard to the issue of scalability, Terra has also developed an efficient system that operates on the principle of “the more users, the more transactions can be processed”. 

The network working on the PoS principle, where each staker is a validator of transactions. We said that when you want to emit a stablecoin, you have to stake a LUNA, so that each user of the network becomes a validator and contributes to the overall scalability. 

History and founders

The idea of creating a decentralized payment network with stablecoin is owned by Daniel Sheen and Do Kwon. Together they registered Terraform Labs – a company dedicated to the development and support of the Terra network. Also:

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Daniel Sheen co-founded the e-commerce platform Ticket Monster and asian accelerator the Fast Track. 

Daw Kwon is a developer with experience in Microsoft and Apple and creator of the startup Anyfi.

The history of its development is rather short and the key events of the protocol are yet to come. Perhaps in 2021, we will see the migration of Terra from Etherium to other blockchains, as well as start of liquidity and farming pools for the stablecoins represented on Terra. 

Mining

As already mentioned, the Terra network uses the PoS algorithm. That means the mining of new coins it’s just a fee to validators for staking LUNA tokens. 

It looks that this mechanism is not very effective in a fixed-offer system, but in fact the network never reaches a limit because of the fees charged for the transaction. Commissions are charged as a percentage of the amount of the stablecoin that the payer uses, after which the protocol converts it to LUNA and burns. 

That means, the commission from the translations is all time distributed among the validators, and the more the network is used, the more fees validators can get. 

Where to buy a LUNA: available exchanges 

We liked the idea of using self-balancing and decentralized stablecoins (especially the Mongolian tugrik), so the Luna coin will appear on Binaryx in the near future. This means that you can purchase Luna for:

  • emmit the necessary stablecoin;
  • staking;
  • investing.

We will provide token trading in the most popular crypto-crypto and crypto-fiat pairs to make it easier for you to access virtual stablecoins. 

Wallets

Since Terra is positioned as a multichain network, the choice of wallet for LUNA tokens depends on which blockchain you use the token on. Currently, ERC-20 tokens are available, which means they can be stored on all compatible wallets. 

Terra also offers a mobile and desktop asset management application and dashboard on the official website. And after listing at the Binaryx, you can store and manage your tokens directly from your account.

Conclusion 

Many people say that stablecoins it’s the future of cryptocurrencies, but in the form in which they are now presented, they can’t call cryptocurrencies. Centralization, low scalability, and floating course reduce the using and popularization of stablecoins. 

The Terra network has solved these problems by developing new interpretations of existing technologies and solutions. With the help of LUNA, Terra can provide a truly stable and decentralized currency linked to the fiat. It seems that the distribution of Terra and its “dollars” in Europe and the US is only a matter of time. 

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