What is Terra Classic?

Terra Classic (LUNC) is a rebranded iteration of the original Terra blockchain protocol, which was developed to facilitate stable, global payment systems using fiat-pegged stablecoins. The Terra protocol merges the price stability of fiat currencies with the censorship-resistance of Bitcoin, with the intention to provide swift and affordable settlements. The genesis block of the new chain, Terra (LUNA), was launched in May 2022, and the original Terra chain was rebranded as Terra Classic. The original native token, LUNA, was also renamed as LUNA Classic (LUNC). Terra Classic continues to support stablecoins pegged to various currencies, including the U.S. dollar, South Korean won, Mongolian tugrik, and the International Monetary Fund's Special Drawing Rights basket of currencies.

How does Terra Classic work?

Terra Classic operates using a proof-of-stake consensus algorithm based on Tendermint, where LUNA Classic (LUNC) token holders stake their tokens to validate transactions. The primary function of the LUNC token is to absorb the price deviation of the algorithmic stablecoin, UST. The price of the UST stablecoin was pegged to the US dollar by minting and burning UST tokens to balance the supply and demand of the coin. Terra Classic maintains its one-to-one peg through an algorithm that automatically adjusts stablecoin supply based on its demand. It encourages LUNC holders to swap LUNC and stablecoins at varying exchange rates, as needed, to either expand or contract the stablecoin supply to match demand.

What are the potential use cases for Terra Classic?

Terra Classic strives to provide a platform for stable, global payment systems. Its use of fiat-pegged stablecoins aims to merge the advantages of cryptocurrencies, such as borderless transactions, with the day-to-day price stability of fiat currencies. Terra Classic has established partnerships with various payment platforms, particularly in the Asia-Pacific region, to facilitate purchases made on e-commerce platforms via the Terra blockchain network. Each transaction is subject to a fee charged to the merchant, compensating LUNC stakers for their role in transaction validation.

What is the history of Terra Classic?

Terra was conceived in January 2018 by Daniel Shin and Do Kwon, with development beginning the same year. The mainnet officially launched in April 2019. In May 2022, the genesis block of the new chain, Terra (LUNA), was launched, and the original Terra chain was rebranded as Terra Classic. The rebranding was part of a recovery plan following the collapse of UST in the spring of 2022, which was likened to the Ethereum/DAO hack of 2017. The existing chain and token were rebranded as Terra Classic, and new LUNA tokens were distributed to existing holders of LUNA and UST. As of August 2022, the total supply of Terra Classic (LUNC) is 6.9T, with 6.5T LUNC in circulation.