What is Terra?

Terra (LUNA) is a public blockchain protocol that strives to combine the price stability and wide adoption of fiat currencies with the censorship-resistance of Bitcoin. It evolved from Terra Classic, which was home to the algorithmic stablecoin TerraClassicUSD (UST). After a significant devaluation of LUNA, the original token of Terra Classic, a new chain was launched, resulting in the current Terra blockchain. Terra continues the legacy of Terra Classic, but without the UST stablecoin. Instead, it focuses on building with the help of the LUNA community, evolving the user experience that brought Terra Classic to participation in the blockchain space.

How does Terra work?

Terra operates using a proof-of-stake consensus algorithm based on Tendermint, where LUNA token holders stake their tokens as collateral to validate transactions. The network incentivizes security by offering staking compensation of 7% annual inflation. This aligns the interest of validators with the long-term success of the Terra ecosystem. The LUNA token plays a crucial role in the Terra ecosystem, being airdropped across Luna Classic stakers, holders, residual UST holders, and essential Terra Classic app developers. This makes Terra a fully community-owned chain.

What are the potential use cases for Terra?

Terra aims to be a platform for the development of decentralized applications (DApps). It has attracted many DApps that have agreed to migrate to Terra to continue their functionality. The Terra blockchain also seeks to offer fast and affordable settlements. It has the potential to be used in various sectors, including e-commerce, where it can be a stable and efficient payment system. Terra also strives to foster the adoption of blockchain technology and cryptocurrency through a focus on price stability and usability.

What is the history of Terra?

Terra was founded in January 2018 by Daniel Shin and Do Kwon, with the development of Terra Classic launching the same year and the blockchain launching in April 2019. After the collapse of Terra Classic at a certain point in time, a new chain was launched, resulting in the current Terra blockchain. The founders envisioned the project as a way to drive the adoption of blockchain technology and cryptocurrency through a focus on price stability and usability. Despite facing criticism for his plans to revive the project after the collapse of Terra Classic, Do Kwon's proposal was voted into effect by the community, resulting in the hard fork of Terra Classic and the birth of the new Terra blockchain.