November 26, 2022

What Is Terra (LUNA) Cryptocurrency?

3 min read

Over the last year, the Terra job has actually improved its investors’ wallets. Only since the start of 2021, LUNA cryptocurrency has actually risen by over 4,500%. Also, Terra substantially delved into the top cryptocurrencies by market capitalization list and got its should have eleventh location. What’s special about the LUNA token and total Terra ecosystem? Let’s figure it out.

Decentralized Stablecoins Behind Terra

The crypto world got ill of this wild rate volatility considering that it became a major roadblock towards crypto adoption. Besides, the fee cost concern takes a turn. In conventional banking systems, the intermediaries take up to 5% of each transaction. Terra minimized the transactional expenses to 0.5%.

Now, Terra is a successful financial platform that serves next-generation decentralized apps. Terra procedure provides a specific service– decentralized stablecoins minted on one platform. At first, Terra launched 6 stablecoins pegged to USD, EUR, CNY, JPY, GBP, and KRW. In the Terra environment, these are called TerraUSD (or UST), TerraEUR, TerraCNY, etc. New fiat currencies can be added by users’ votes.

Terra stablecoins offer budget-friendly cross-border exchange and immediate swaps between the internal tokens at exceptionally low costs and beneficial rates. It implies that you can exchange UST for TerraCNY in seconds without any intermediaries.

LUNA Token, Explained

While Terra stablecoins make sure great cross-border transaction throughput and instantaneous internal exchange, the LUNA token serves as an utility and governance token. It has 2 main functions:

  1. Ensuring the stablecoins’ cost stability;
  2. Being a part of validator staking via Proof-of-Stake.

As pointed out above, LUNA token functions as protection versus price changes of the Terra cryptocurrency. It likewise allows the cost of coins to be kept at 1 SDR (Special Drawing Rights). SDR is a worldwide reserve property, the price of which is determined depending upon the value of the US dollar, Chinese Yuan, Japanese Yen, and British pound sterling in the ratio of 41.73%, 30.93%, 10.92%, 8.33%, and 8.09 %.

Hence, if the cost falls below the target level of 1 SDR, the protocol buys 1 Terra coin, while offering LUNA worth 1 SDR, and if the price rises above 1 SDR, the protocol offers 1 Terra coin, while earning LUNA worth 1 SDR.

The next thing is the protocol which is based on the Proof-of-Stake consensus mechanism. It suggests that users (miners) can hold some LUNA tokens on the network to get a benefit. This process is called staking.

How to Use and Store Terra Stablecoins and LUNA? Terra partners and clients access the Terra blockchain network directly through their own wallet called Terra Station. It allows users to communicate with various Terra-based decentralized applications (dApps) constructed on the platform to exchange tokens, delegate LUNA tokens to validators, and handle funds.

Terra’s API enables merchants to customize their company by utilizing the payment integration with Terra Station for instantaneous shopping and settlements. It is available for mobile phones and as a web variation.

LUNA’s Impressive Price Performance

At the end of August 2021, the Terra token rose by 327% in a month and renewed its price high. The development of the digital coin was connected with the upcoming Terra Columbus-5 blockchain upgrade, which happened on September 30.

As we can see from the rate chart, the development is breathtaking. Needless to state that for the in 2015, the token got more than a 13,000% increase and enriched its early financiers’ wallets. All in all, LUNA enables a really democratic economy that can make different fiat currencies borderless.

The post What Is Terra (LUNA) Cryptocurrency? appeared first on Cryptocurrency News & & Trading Tips– Crypto Blog by Changelly.