What is Terra?
Terra is a decentralized financial payment network that rebuilds the traditional payment stack on the blockchain. It utilizes a basket of fiat-pegged stablecoins, algorithmically stabilized by its reserve currency Luna, to facilitate programmable payments and open financial infrastructure development. As of December 2020, the network has transacted an estimated $299 billion for over 2 million users.
What is Luna?
Luna is the reserve currency of the Terra platform. It has three core functions: i) mine Terra transactions through staking, ii) ensure the price stability of Terra stablecoins and iii) provide incentives for the platform’s blockchain validators.
The Terra protocol runs on a Proof of Stake (PoS) blockchain, whereby miners must stake their Luna in order to mine transactions. All else being equal, a validator who has staked more Luna has a higher chance of generating the next Terra block compared to another validator who has staked less. In essence, Luna represents a validator’s mining power.
However, in providing network security and validation, Luna holders and stakers are exposed to the price risks associated with the asset. This is because the Terra protocol readily exchanges Terra stablecoins for Luna at their determined exchange rate to maintain the peg. When demand is high and prices are above the peg, it will sell stablecoins for Luna. When demand is low and prices are below the peg, it does the opposite. In this way, validators absorb the short-term volatility of the network.
To compensate for this, validators are given rewards in the form of: i) staking rewards, ii) gas fees, iii) taxes, and iv) seigniorage rewards. Staking rewards are determined by the size of a validator’s stake and are structured to incentivize transaction volume increases. Gas fees and taxes are similar in that a small fee is imposed on all Terra transactions, distributed to validators on a pro-rata basis. Finally, seigniorage rewards are given to validators who participate in the Luna exchange rate oracle process.
These rewards seek to create mining demand that is stable and evergreen throughout all economic conditions. If rewards are increasing, the protocol decreases network fees and seigniorage rewards, and vice versa. More information on Luna and its rewards can be found in Terra’s Docs website, as well as in its whitepaper. Alternatively, you can watch our video to learn about the Luna ecosystem.
How do Terra stablecoins maintain their price stability?
The Terra network achieves price stability by algorithmically adjusting its supply based on fluctuations in demand. Once it detects that a Terra stablecoin has deviated from its peg, it will apply pressure to correct the deviation.
The protocol makes use of natural market forces to achieve this. For instance, if the price of 1 TerraUSD (UST) is above its $1 US dollar peg, the protocol must compensate by increasing the supply of UST. It mints some of the stablecoin and sells them on the open market. Arbitrageurs can then swap $1 US dollar worth of Luna in exchange for 1 TerraUSD and stand to profit. Minting and swapping occur until the supply of new UST is sufficient to bring back UST’s peg.
Likewise, should the price of 1 TerraUSD drop below its $1 US dollar target, the protocol will decrease the supply of the stablecoin. It mints Luna and sells them on the open market. Profit seekers can then exchange 1 UST for $1 US dollar worth of Luna and pocket the difference. In both cases, the Terra protocol prints as much stablecoin or Luna as necessary until the peg for each asset is satisfied.
The protocol thus serves as a market-maker for Terra/Luna swaps. So long as there is a certain level of demand within the Terra ecosystem, either driven by Luna’s value or Terra’s transactions, the exchange of value between both assets preserves stability and mitigates volatility. To learn more about Terra’s price peg and the role that Luna plays in this mechanism, you can check out Terra’s stability mechanism page or its whitepaper.
Where can you buy Terra Luna Classic?
LUNC tokens can be traded on centralized crypto exchanges. The most popular exchange to buy and trade Terra Luna Classic is LBank, where the most active trading pair LUNC/USDT has a trading volume of $2,269,663 in the last 24 hours. Other popular options include Gate.io and Binance.
What is the daily trading volume of Terra Luna Classic (LUNC)?
The trading volume of Terra Luna Classic (LUNC) is $98,025,027 in the last 24 hours, representing a 319.50% increase from one day ago and signalling a recent rise in market activity.
What is the all-time high for Terra Luna Classic (LUNC)?
The highest price paid for Terra Luna Classic (LUNC) is $119.18, which was recorded on Apr 05, 2022 (over 2 years). Comparatively, the current price is 100.00% lower than the all-time high price.
What is the all-time low for Terra Luna Classic (LUNC)?
The lowest price paid for Terra Luna Classic (LUNC) is $0.051, which was recorded on May 13, 2022 (about 2 years). Comparatively, the current price is 6,269.49% higher than the all-time low price.
What is the market cap of Terra Luna Classic (LUNC)?
Market capitalization of Terra Luna Classic (LUNC) is $346,090,691 and is ranked #146 on CoinGecko today. Market cap is measured by multiplying token price with the circulating supply of LUNC tokens (5.4 Trillion tokens are tradable on the market today).
What is the fully diluted valuation of Terra Luna Classic (LUNC)?
The fully diluted valuation (FDV) of Terra Luna Classic (LUNC) is $431,792,058. This is a statistical representation of the maximum market cap, assuming total number of 6.8 Trillion ETH tokens are in circulation today.
