Authored by: @hetty-rowan

Today it is time for a 'new' crypto currency. And new is in quotes because the crypto we are talking about today is not a newcomer to the market. The project has been around for a while now ... and after a slow start it seems to have finally found its footing. Support within the crypto world is growing day by day and the price of the coin is growing with it. Today we are talking about;

TERRA LUNA

What is Terra?

Terra is a digital currency in the DeFi system whose primary purpose is to indemnify users from paying additional hidden fees in the e-commerce world. This by bringing blockchain technology to the masses worldwide with a focus on utility (utility token) instead of trading. The company behind Luna is based in South Korea and was founded in early 2018 by Do Kwon and Daniel Shin. With investments from major players such as Coinbase Ventures, they quickly had $32 million to develop their project. They soon released the stablecoin LUNA.

• Transactional The fact that there is currently no crypto that is suitable as an international means of payment is due to the ongoing volatility and price fluctuations. There are some projects working on a suitable solution to this problem and Terra's protocol is an example of this. It uses an elastic monetary policy to develop crypto that is price stable and also linked to different types of fiat money.

  In practice, we see that in addition to volatility, there are few examples where you can pay as a consumer with a crypto variant. As long as there is insufficient demand here, this will remain a difficult issue. Of course, the seller also wants to be able to use this currency and is looking for added value in addition to simply owning this crypto. In the media we see that there are gradually more possibilities to pay with crypto in the future.

  The Terra protocol ecosystem is divided into two types of tokens: the Terra stablecoins and the LUNA tokens. LUNA is the driving force behind the stabilization of the Terra stablecoins. How they are going to stabilize these in the protocol, they do by means of an elastic monetary policy. Through this policy, they constantly monitor supply and demand to balance it in a stable currency.

  
  

• Elastic monetary policy An elastic monetary policy could be a possible solution for the stability of the crypto ecosystem. The first step in achieving this is to implement a strong fiscal policy. This could boost the adoption of new crypto and create greater support.

  They achieve this by involving the community in the protocol. Proposals will be discussed with stakeholders in the ecosystem that can be voted on for approval. If positive, it will be funded. This increases the general acceptance, which also makes it more interesting for investors to have this say. The Terra protocol here strives to strike a balance between promoting stability on the one hand and acceptance by the general public as a complement to the standard fiat currency on the other.

  
  

Stable Coin

What Terra's project aims to achieve is to create a stable crypto that will enable the mass adoption of blockchain, especially in the e-commerce sector. Another stable coin, we don't have enough stablecoins already, why create a new one? Stablecoins can be divided into different categories:

1.) Fiat money as collateral These are stablecoins that use a fiat currency as collateral. These tokens are issued at a ratio of 1:1 to a dollar or other currency. For example, Tether is a centralized stablecoin that pegs itself to the US Dollar. One USDT is equal to 1 USD.

2.) Crypto as collateral These are stablecoins that use other crypto as collateral. An example of this is the DAI. It also equals 1 USD and people can borrow DAI by taking Ethereum as collateral. Using another crypto as collateral is not entirely without risk. If the value of your collateral, in this example Ethereum, crashes, the entire ecosystem is at risk.

3.) No collateral Finally, we have stable coins without collateral from an external crypto or fiat currency. These are also called algorithmic stablecoins of which Terra is an example. It is maintained by adjusting supply to demand.

What is Terra Protocol?

Terra (LUNA) is a Proof-of-Stake blockchain protocol that aims for stable payments, worldwide and independent of the currency. The protocol is supported by several stablecoins, each linked to different fiat currencies. They are stabilized on the basis of an algorithm by the asset of the blockchain itself: LUNA token.

Terra wants the efficiency with this for both traders and consumers. The financial infrastructure of the ecosystem is constantly being improved and optimized and they hope to eventually arrive at a credible, transparent and above all neutral payment system that everyone worldwide can use as a new means of payment.

What is LUNA?

Where do all these new stable coins come from and more importantly, how do they work, and what is the collateral? This is where the LUNA token sees the light. Fees are paid to LUNA holders every time a transaction is made. This accumulated value is used as collateral for the Terra value in the ecosystem. The Terra protocol runs on a Proof-of-Stake blockchain. This means that miners use their own cryptocurrency, in this case LUNA, to mine transactions on Terra blockchain.

LUNA is the native token of the Terra protocol and is used, among other things, as collateral to secure the price stability of the stable coins. It is also seen as the foundation of Terra's network and ecosystem. You can also use LUNA to earn interest through strikes.

Luna staking rewards

Every crypto is subject to price fluctuations, but the less trading and the more a coin is held, the more stable the price. The project therefore realizes strike proceeds so that investors with the Luna token in this way stimulate to keep the token in the long term.

Tokenomics

The Terra protocol includes a number of stable coins, all of which are tied to fiat currency used for e-commerce payments. The payments are made quickly, within a time span of 6 seconds the payments would have been received at the merchant. A fee of 0.6% is taken on every trade by default. In practice, we see that costs with credit cards quickly rise to +2%.

Payments can also take a long time. Traditional transfers can sometimes take days. This is because each bank works with a different system that has to verify every transaction before it can be validated. Blockchain technology wants to optimize this transaction speed, but in practice we see that this sometimes also includes a waiting time. With a speed of 6 seconds, every transaction is validated and completed in no time.

Terra Price stabilization

Stabilizing a certain coin is of course a nice thing, but for many it is unknown how this can be achieved in practice. Terra does this by adjusting their supply to the fluctuations in demand. So when strong demand for Terra increases, it will start to positively affect the price. This is where the protocol comes into play to balance it. In this way, the currency and price remain linked to the current value of the stable coin. Of course, this also applies in a situation where demand decreases. The protocol will then create/store or burn additional coins to increase the token's market supply.

This is the basic mechanism of their elastic monetary policy. This allows them to react quickly to rising or falling market prices in order to regain a balance between supply and demand. We see that Terra's protocol is able to keep the value relatively stable through market developments, but it is impossible to keep this currency perfectly stable for several reasons. The protocol is still busy innovating itself.

LUNA is used as collateral to keep the price stable in the crypto market. Those who invest in collateral, including holding the LUNA token, invest long-term in the network and thus absorb short-term volatility. In return, they get profits and steady growth. Terra holders in turn pay transaction fees to miners who ensure that the price remains stable by mining or burning additional tokens. This system will remain useful as long as there is enough Terra or Luna to achieve the balance.

Future Terra

Crypto is a very interesting world, and we see the world continues to grow and that the number of investors is also increasing. All too often, we see people here hoping to make a quick buck and invest in high-risk projects to maximize their profits at a record pace. Other investors strongly believe in blockchain technology and are more aware of the fact that our current currency is depreciating and want to secure their investments via a stable coin. It happens more often that investors leave a project and then invest it in a stable coin, which is not subject to inflation. But what is Terra's future?

Terra is working hard to gain acceptance from the public. Currently, the crypto is in the top 20 on CoinMarketCap with a market cap of more than $6 billion. There are a number of aspects that are necessary before, so that you can also use Terra in the future. As more companies agree to accept Terra as a means of payment, the value of the network will also increase and it will gain more support.

Terra Price Price Forecasts for 2021

Making predictions about the price of a cryptocurrency is always a rather dangerous activity. Why? The market is volatile and subject to various factors that can affect the price, both in the short and long term. Nevertheless, let's take a look at what speculations there are on the internet.

Most opinions I could find around on the internet are rather positive about Terra's price expectations. The market is becoming more mature and Terra is growing along with this market. It is always good to look at the latest developments of the project and what this does to the price in the shorter term. Currently Terra is mainly engaged in bringing in new developers and new companies. They invest in further collaborations that contribute to the ecosystem. To date, the protocol has been able to achieve a lot and this has been expressed in percentage growth. At the beginning of 2021, the exchange rate was USD 4.78. At the end of March 2021, it has already risen to USD 18.21, to be around USD 27 at the time of writing.

Conclusion

As part of Decentralized Finance, Terra is a project that gets a lot of attention. The whole world of crypto is very attractive to many investors. Why? We live in a current economy where more and more money is being printed and there is too much money in circulation. This has accelerated the road to hyperinflation and devaluation of our euro currency. Terra's economy in the world of crypto aims to keep this value stable. If there is a shortage of currency, they will burn Luna, which is used as collateral, until there is a balance again.

With an ever-growing popularity and need for a currency that is not subject to inflation, Terra's protocol seems to offer solutions on a large scale. The protocol has only been around for 3 years and still has a lot of potential to grow. We are therefore curious to see how this will develop further in the future and how much support it will receive from the markets. If they reach the bigh mass with their innovations, the price may just go to an all-time high, and right now… I'm more likely to expect the record high. Although this of course remains to be seen, because as with everything within crypto. It can just as easy go the other way ...

ALWAYS DYOR!

Posted Using LeoFinance ^Beta