Exchange Terra Classic (LUNC)

Terra Classic is a blockchain protocol and payment platform. Its previous version was originally used for algorithmic stablecoins. Terra is rebuilding the traditional payment stack on the blockchain. The idea behind the project was to facilitate program payments and an open financial infrastructure environment. 

Originally it was created in 2018 under the name Terra and offered a basket of algorithmically stabilized stablecoins. The most famous one, UST, was pegged to the price of the US dollar by algorithmically relating its price to the Luna token. The founders of the project are Daniel Shin and Do Kwon. They conceived Terra as a way to drive the massive adoption of crypto and blockchain technology in general. 

The advantages of the Terra network are low transaction fees, a higher level of scalability, and the stability of the price. The project has partnered with a big number of payment platforms and services. It is also supported by the Terra Alliance, a group of business platforms that works on the wider adoption of Terra. 

Unlike other stablecoins, the ones of the Terra Classic network were pegged using a specific algorithm that adjusts the supply of stablecoin depending on its demand. Whenever the demand overreached the stablecoin price, the system sold them for LUNC (used to be known as LUNA). And when the price was going too low, the algorithm was buying more stablecoins with LUNC. In this way, validators were managing to absorb the possible volatility of the asset. And for doing so they received rewards. When the rewards increased the fees on the Terra network went down. 

Terra blockchain runs on the Proof-of-Stake consensus protocol and to mine their transactions users need to stake their Luna tokens.

On May 9, 2022, the UST stablecoin of Terra lost the peg and its price started to collapse. In just a few days the token price dropped to $0.3 instead of trading for $1 as it was meant to be. It caused a massive sell-off of the currency and even the algorithm that started to sell LUNA to stabilize the price couldn’t help UST to reach $1 again. But because its supply overreached 6 trillion tokens, the price of 1 LUNA decreased by over 99% in just a couple of days. 

After the original Terra network was halted and their stable coin was de-pegged from the dollar, the project team decided to hard fork the network, launched a new token for stabilizing the price of the stable coin, and rolled out the Terra 2.0 network on May 28. It went live on a newly created “Phoenix-1” mainnet. Terra 2.0 removed the stablecoins algorithm that caused the instant death of the previous token. The team kept the Layer-1 solution.

The LUNA token was replaced by the Terra Classic (LUNC) coin. It has a supply of 1 billion. The price of the new asset skyrocketed in the first 2 days after the asset was introduced to the community. 

Even though Terra Classic calls itself a network decentralized like never before and still has a lot of supporters and token holders (partly thanks to the airdrops for the users that lost their money when the previous LUNA token of the project collapsed), not all the investors are ready to trust the project again.