Terra is a universal payment system that was launched in 2019 on the Ethereum blockchain, making cryptocurrency more user-friendly and popular across the globe.
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A Quick Overview of our Terra Review:
Terra uses an elastic monetary policy that creates a price-stable crypto which is pegged to a variety of fiat currencies. However, the development team realised that price stability is not enough to ensure that there is wide-spread adoption.
Terra Live Price
What is Terra?
Terra is a universal payment system which was launched in 2019 on the Ethereum blockchain, making cryptocurrency more user-friendly and popular across the globe. Terra aims to create a decentralised network for both fast and scalable payment solutions linked to stable currencies.
Key Features and Takeaways of Terra
Terra is one of the popular cryptocurrency projects in the industry that has the following key features and takeaways:
Terra uses an elastic monetary policy that creates a price-stable crypto which is pegged to a variety of fiat currencies. However, the development team realised that price stability is not enough to ensure that there is wide-spread adoption.
Terra’s development team, through its policy, aims to create an efficient fiscal spending regime which is managed by its Treasury.
Proposals from the community is vetted by the rest of the ecosystem and when they are approved, they are financed with the objective to increase adoption and subsequently increase use cases.
Terra works to develop and support stable payments and to open various financial infrastructures, supported by several seigniorage-style stablecoins which are pegged to several fiat currencies. All these are stabilised by Terra’s native token, LUNA, by using algorithms.
Terra is, in a part, a digital central bank and another part of its unique system helps to replace complicated and expensive payment chains that consist of banks, gateways, and credit card networks.
Terra offers merchants and consumers with efficiency and versatility while consistently improving the infrastructure and tools of the overall ecosystem, reaching a payment system that is distributed, transparent, and credibly neutral.
Terra’s partner system, CHAI, has already seen mass adoption with more than 2 million users in South Korea. The team hopes to use this as a boost to create more widespread systems and to expand further.
LUNA is used for staking, which secures the network, helps with governance, and collateralisation for price-stability of the stablecoins.
Terra Mining
Overview
LUNA as the native token of Terra cannot be mined but can be staked. Terra uses a two-token system consisting of LUNA and Terra. LUNA is collateral for Terra, which is the stablecoin of the network. LUNA also powers the Delegated Proof-of-Stake (DPoS) blockchain which ensures stability as well as security of the network.
The staking rewards are distributed to network validators first and they take a small commission for themselves before the reward is passed along to individual delegators. The size of rewards depend by the size of the stake and they can increase as transaction volumes in the network increase, this as result of the staking rewards originating from transaction fees.
As of the beginning of the year, 31.77% of LUNA holders are staking the token and they receive a 4.89% return annually. These rewards are generated from transaction fees (Gas), taxes on transaction, and seigniorage rewards.
Gas is the fee which is added to each transaction to prevent that the network is spammed or overloaded. The validator group will set the minimum Gas price and transactions that have implied gas above this minimum will be rejected. At the end of every block, gas fees are released to the validators mentioned.
The Terra protocol charges small taxes on transactions which range from between 0.1% up to 1% per transaction. These taxes are implemented as stability fees and it can be paid in any Terra currency. Taxes are also distributed to validators at the end of each block.
The group of validators can participate in the exchange rate oracle process, allowing them to collect rewards from the seigniorage pool every time their vote is within the reward parameters.
Phases of LUNA
LUNA can exist in three different stages, namely:
Unbonded – which is LUNA that can be freely used in transactions as a regular token that does not have restrictions.
Bonded – which is staked. While this LUNA is bonded, it continues to generate rewards for the validator and delegator to which it is bonded. This LUNA cannot be traded freely, and it remains locked in the ecosystem until it is unbonded.
Unbonding – Undelegating or unstaking LUNA is known as “unbonding” in a process which lasts 21 days. During this time, there are no staking rewards and the LUNA being unbonded cannot be freely traded. Once the 21-day period is over, the LUNA is reverted to an unbounded state and it can either be bonded or freely traded.
Validators
Terra is powered by the Tendermint consensus that relies on a set of validators who must secure the network. These validators run on full nodes and they work to provide consensus for the network. Validators commit new blocks to the blockchain and in return, they are compensated with various rewards.
Validators also participate in governance of the Treasury and they have voting influence based on the size of their stake as well as their delegations. Only the top 100 validators who have the most weight can become active validators.
If they double-sign or they are offline frequently, they risk their staked LUNA, which can be subjected to a “slashing” to penalise their negligence and/or misbehaviour.
Delegations
Delegators are users who hold LUNA who can either choose not to become validators, or who cannot become validators for whichever reason. Delegators make use of the Terra Station to delegate their LUNA to a validator. In exchange, these delegators receive a proportional amount of staking revenue.
Delegators share in a portion of the revenues made from staking and as result, they also share a portion of the responsibilities of the validators. This means that if a delegator’s validator misbehaves and their LUNA is slashed as result of this, the delegators’ staked LUNA will also be slashed in proportion.
For this reason, delegators must ensure that they choose their validators carefully and that they spread their stake across multiple validators.
How to stake LUNA
To stake LUNA, users can follow these steps:
The user can download the Terra Station wallet by visiting the terra.money website.
Users can select the Terra Station from the homepage and choose to “Create a New Account”.
Users will be prompted to create an account name and a password, and to securely back up the 24-word Seed Phrase (Mnemonic) for their Terra Station account.
Users can send the LUNA that they wish to stake to the newly created LUNA address in their Terra Station wallet.
Users can log into their wallet and click on the “Staking” tab in the global menu which can be found on the left-hand side of the wallet.
In this tab, the user can select the “Validator” section and click on “Staked” from within the list of validators.
Next, the user can click on the “Delegate” banner in the top right corner of the screen to open the delegate lightbox modal.
Users can enter the amount of LUNA that they wish to delegate and ensure that they have the correct address in the required field.
The user can click “Next” on the Delegate screen, “Next” on the confirmation screen, and enter their Terra Station password, followed by selecting “Submit”.
The user can view the list of their successful LUNA delegations in the “My Delegations” section of the Staking tab.
Pros and Cons
| ✔️Pros | ❌Cons |
|---|---|
| Terra solves a variety of issues faced with scalability and centralisation | Fees are lower but there are several types of fees to be paid |
| Variety of wallets that accept and support LUNA | Validators and delegators are subjected to slashings |
| There are many major exchanges that support and offer LUNA, which helps adoption | Highly competitive field with many participants racing to become the best and gain the most adoption |
| User-friendly desktop and mobile app offered |
Transaction Fees
| Type of Fee | Information |
|---|---|
| Tax rates ranging from | 0.1% to 1% per transaction, capped at 1 TerraSDR |
| Withdrawal fees | 0.1 LUNA |
Should you buy Terra?
Terra has gained significantly in popularity despite the competitiveness of the field associated with stablecoins being used to stabilise prices in global payment networks. Terra seeks to change volatility by using fiat-pegged stablecoins and uses its own proprietary algorithm that automatically adjust the supply of stablecoin based on the demand for it.
LUNA offers liquidity, price stability, and it is easily exchangeable with other stablecoins at profitable exchange rates. Prices of LUNA has seen significant increases in recent years, exploding more than 2 000% in the last few months.
Terra has secured a variety of partnerships and there is a recent hype with regards to non-fungible tokens (NFTs) which has also driven the popularity of many cryptocurrencies, including LUNA. There is substantial growth for further development for Terra and LUNA, with a steady increase in price predicted for the next few years.
How to buy Terra (LUNA)
Step 1 – Open an account on Binance
Navigate to the official Binance website and select “Register Now”. You will be redirected to a “Create a Free Account” where you can either register with your email address or your mobile number.
You can enter your email address and user-selected password or select the “Mobile” option at the top of the form. Select your country code and enter your mobile number along with your user-selected password.
Once you have completed the necessary fields, you can read and accept the Terms of Service before selecting “Create an Account”.
You may have to complete a Security Verification that will confirm that you are not a robot. Next, there is an account verification. During this, a 6-digit verification code is sent to the email address or mobile number that you provided. The code is only valid for 30 minutes and must be entered in the blocks provided on this page.
Once the verification is completed, a welcome page will load, and you will be given the options through which you can either trade or purchase cryptocurrency. If you are new to crypto, you can visit the “Learn More” Section at the bottom of the page.
Step 2 – Secure account with two-factor verification
On the trader’s dashboard, select the option to secure your account with two-factor verification. Even though phone verification is a secure option, the most preferred and secured method is to make use of the Google Authenticator.
Once downloaded and installed, either scan the QR code or type in the one-time, unique code provided to add your Binance account credentials onto Google Authenticator.
Once completed, write down the back up key provided to recover your account on Google Authenticator in case you lose or misplace it. In the final step, enter the 6-digit code which you will receive on your registered email address along with the Google verification code.
Step 3 – Deposit funds
Binance allows for the purchase of cryptocurrencies via fiat deposits as well as cryptos. Deposits can be accessed from the following locations:
The “Welcome to Binance” banner.
Hovering over “Buy Crypto” at the top of the webpage and selecting your preferred method.
Selecting “Deposit” on the “balance details” section on your traders dashboard.
Once you have selected the option to “Deposit”, you can select whether you wish to deposit cryptocurrencies from another wallet, or whether you want to make a fiat deposit.
For Crypto deposits, follow these steps:
Select your coin between Bitcoin, Ethereum, BNB, and others.
Select the network to be used between BEP2, BEP20 (BSC), ERC20, or TRC20 and accept the conditions for using the network.
Copy the address or scan the address QR code from the wallet where you are depositing and follow further prompts. Kindly note that each network has its own set of network confirmations between 1 up to 15 confirmations before the deposit will be done.
For deposits in Fiat currencies, follow these steps:
Select the deposit currency from the dropdown list. To gain access to more currencies, it is necessary to verify your identity and face.
Select the payment method to be used, depending on the currency chosen.
Enter the deposit amount and any other details. Kindly note that the transaction fee will be displayed along with the balance after this is subtracted.
Continue with the deposit.
Step 4 – Start Trading
Once you have completed your deposit, you can navigate to the “Markets” section at the top of the page to view the available cryptocurrencies. From here, you can buy, sell, and trade currencies at competitive prices.
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Frequently Asked Questions
When was Terra first launched?
Terra was launched in April 2019.
Who founded Terra?
Terraform Labs was founded by Do Kwon and Daniel Shin.
What is “ICO”?
It is Initial Coin Offering that, unlike an IPO, does not mean that those who invest in the cryptocurrency will have an ownership stake of the company that they provide funds to.
When was Terra’s ICO and how much did it raise?
Terra’s ICO was in March 2019 in which 141 million ZAR was raised.
Is Terra legit?
Yes, Terra is legit.
What is Terra’s total supply?
There is a total supply of 1 billion LUNA tokens. If this number is exceeded, LUNA is burnt until it returns to the equilibrium supply level.
What is the purpose of Terra?
To enhance the decentralised finance (DeFi) space through programmable payments to achieve adoption of LUNA and other cryptocurrencies.
On which blockchain is Terra based?
Terra is based on the Tendermint blockchain.
Does Terra work with smart contracts?
Yes, Terra works with smart contracts.
Does Terra have potential to become more valuable?
Yes, Terra has the potential to become more valuable long-term.
