Terra is a blockchain platform focused on creating a stablecoin ecosystem. The native cryptocurrency of the Terra network is Terra (LUNA), and it is designed to be a stablecoin that maintains its value by being pegged to a basket of fiat currencies.
Terra is an open-source blockchain that hosts a dynamic ecosystem of decentralized applications (dApps) and cutting-edge developer tools. Leveraging a proof-of-stake consensus mechanism and innovative technologies such as Mantlemint, Terrain, and Station, the Terra blockchain ranks among the swiftest chains available, offering users an unmatched experience in decentralized finance (DeFi). Operating as a permissionless and borderless economy, Terra facilitates the creation of next-generation financial products, ensuring accessibility for anyone with an internet connection.
The Terra network was founded by Daniel Shin and Do Kwon. Daniel Shin is a South Korean entrepreneur with experience in various industries, including finance and technology. Do Kwon is a software engineer and entrepreneur who played a key role in the development of the Terra blockchain.
The Terra blockchain operates as a proof-of-stake blockchain, leveraging the Cosmos SDK for its underlying framework, and secured through a verification system known as the Tendermint consensus. Terra incorporates smart contract functionality, enabling developers to build decentralized applications (dApps)
Validators serve as the equivalent of miners in the Terra blockchain, tasked with the critical responsibility of securing and maintaining the accuracy of the network. Through running programs known as full nodes, validators can verify every transaction conducted on the Terra network. Their duties include proposing blocks, participating in voting processes to determine block validity, and appending each newly accepted block to the blockchain. In return for their efforts, validators receive staking rewards derived from transaction fees.
Luna Classic (LUNC) emerged as the initial native token within the Terra blockchain, debuting in August 2018. Its existence predates the rebranding of the Terra blockchain, now recognized as Terra (LUNA), and it remains tethered to the foundational code of the original Terra ecosystem.
The primary purpose of LUNC was to stabilize the value of the algorithmic stablecoin, UST. By orchestrating the creation and destruction of UST tokens, the system maintained the stability of UST in relation to the US dollar. However, in May 2022, the UST stablecoin encountered a deviation from its peg, resulting in a substantial collapse. This instability triggered an excessive generation of LUNA tokens, initiating a hyperinflationary trend and leading to a remarkable 99% devaluation of the original LUNA token. Luna Classic (LUNC) thus retains its historical significance, having been an integral part of the Terra ecosystem since its inception in 2018.
The collapse of the Terra Classic ecosystem emerged as a significant narrative in the first half of 2022. On May 9, 2022, USTC experienced a detachment from its peg to the US dollar. Despite the creation of new LUNC tokens to back the circulating $17 billion worth of USTC and the injection of over $2.4 billion in BTC from the LFG Reserve to bolster USTC liquidity on exchanges, the stablecoin continued to deviate from its targeted $1 peg in the subsequent days.
On May 28, 2022, the inaugural block of the newly established chain was initiated for future transactions, adopting the name Terra (LUNA). Simultaneously, the original Terra Chain underwent a rebranding and is now recognized as Terra Classic. The original native token, LUNA, underwent a nomenclature shift and is now referred to as LUNA Classic (LUNC). Additionally, the network's stablecoins (UST, KRT, EUT) have been rebranded as Terra Classic stablecoins (USTC, KRTC, EUTC). Notably, the new chain will not host Terra stablecoins.
A theory posits that the introduction of the term "classic" echoes the Ethereum/Ethereum Classic divergence in 2017. CEO Do Kwon suggests that the UST collapse in the spring of 2022 is akin to the pivotal moment of Ethereum's DAO hack in 2017.
Both versions of the token gained legitimacy through the implementation of the Terra Ecosystem Revival Plan 2 proposal. The fundamental idea behind this plan was to bifurcate the existing blockchain, creating a new chain within the ecosystem while preserving the original version.
As per the recovery plan, the existing chain and its associated token underwent a rebranding, now known as Terra Classic. Concurrently, new LUNA tokens were distributed to holders of both LUNA and UST before the de-pegging event and subsequent market downturn. This strategic airdrop was a proactive measure to address the changing circumstances, aiming to ensure continuity and provide value to participants within the ecosystem.
The total supply of LUNC is 6,822,673,706,174 tokens and as of December 8, 2023, the circulating supply is 5,844,535,327,646 LUNC.
The LUNC burn is a feature within the Luna Classic network, where 0.5% of every LUNC transaction is directed to a burn wallet. This burn tax serves the purpose of mitigating the inflated supply of LUNC, which ballooned from 400 million to over 6.5 trillion after the USTC de-peg in 2022. The initial tax rate was 1.2%, subsequently reduced to 0.2%, and currently stands at 0.5% as of May 2023.
As of October 2023 nearly 84.1 billion LUNC tokens, equivalent to over $18.4 million at current market rates, have been sent to the burn address. On average, approximately 95 million LUNC tokens are burned daily, amounting to over 2.88 billion tokens per month. Given the current burn rate, it would take more than 100 years for the LUNC supply to diminish to the community's target of 10 billion coins.
LUNC tokens are accessible for trading on numerous exchanges. While the option to trade them directly for fiat currencies is limited on many platforms, they are readily exchangeable for other cryptocurrencies, with Bitcoin and Ethereum being the primary alternatives.
The average fees on the Terra network
The fees on the Terra blockchain can vary depending on the specific transaction type and the network conditions at the time. The only fee that applies for the transactions on Terra is a gas fee.
On October 20, 2022, the Terra team implemented a modification to the Luna Classic fee on the Terra Classic network, reducing it from 1.2% to 0.2%.
The LUNC token wallets
The LUNC token can be stored in a wide variety of crypto wallets, including popular options such as Trust Wallet, MetaMask, Coinbase, Torus, TokenPocket, imToken, Assure Wallet, Safe Pal, Coinhub, Solflare, Portis, Ambire Wallet, Binance Wallet, FILWallet, etc.
