Terra Luna ($LUNA) which was built using the Cosmos blockchain technology combines the best of both worlds- a network with two intertwined tokens that have separate utility. LUNA coins are on its native blockchain, while Terra USD (CRYPTO: TUSD) stablecoins are on the Ethereum blockchain. The Terra USD is pegged to the US dollar and like all other stablecoins, it seeks to reduce the volatility inherent to cryptocurrencies. To mint new UST tokens, a percentage of another digital token and reserve asset, Luna, is “burned.” If the demand for Terra USD rises with more people using the currency, more Luna will be automatically burned and diverted to a community pool. Price stabilisation is achieved through these trade-offs. So whenever someone carries out a transaction with Terra USD, Luna holders earn extra tokens Terra Luna ($LUNA) is the brainchild of Terraform Labs, a South Korean enterprise that seeks to create its own next-gen stablecoin powered payment platform with the view of supporting cross-border retail payments through the incorporation of fiat-backed stablecoins. The overarching need for such a project stems from Asia's crowded digital payment space where multiple payment sources- GooglePay, ApplePay, SamsungPay view each other. $LUNA seeks to replace the existing fragmented digital payment ecosystem with an end-to-end provide frictionless cross-border transaction system with lower transaction costs. So it's not surprising that $LUNA has raised $150 million in funding from investors such as Arrington Capital, Lightspeed Venture Partners, and Pantera Capital.
Future Prospects
$LUNA could quite easily go to the moon owing to its real-world applications. From 2020 to 2021 $LUNA saw very steep price action; with its price per token going from just $0.52 on Aug. 15, 2020, to $19.25 a year later. This is a growth of almost $3600% which is remarkable even in the crypto world. Terraform Labs seeks to create a digital financial system independent of major banks and fintech-app makers. It has gained traction in South Korea where people have used it for real-life financial transactions such as buying goods and services using the Chai app which is built on their blockchain. Related apps from this ecosystem are gaining popularity in other parts of East Asia. Terraform Labs plans to launch more financial apps in the future. Given the popularity of Chai and Mirror, the upcoming financial apps could well boost $LUNA's popularity. In addition to payment apps, $LUNA's ecosystem also provides a high-yield savings account via its Anchor app for holders of the group’s digital coins. Anchor Protocol allows Terra stablecoin deposits to earn stable yield powered by block rewards of leading proof-of-stake blockchains. In Thailand, retail users can also obtain exposure to “tokenized” representations of corporate stocks (fungible synthetic stocks) such as those listed on US's stock exchanges through its Mirror protocol. Best of all, probably inspired by Uniswap, $LUNA has its own decentralised exchange called Terraswap where users can trade cryptocurrencies and be liquidity providers, meaning they can lend crypto assets to Terraswap to facilitate trading. Liquidity providers earn rewards from Terraswap's transaction fees.
However, $LUNA still lags behind $ETH and it remains to be seen how popular can it become outside South Korea. Additionally, the seamless transactions have been achieved at the cost of decentralisation which may be put off some people. However, its availability on other blockchains may attract more developers into its folds. It is still not available on many popular crypto exchanges although you can get it on Binance. While its fundamentals are strong, it is worth bearing in mind that stablecoins have landed in hot waters in the US. Restrictions on stablecoins could harm Terra's prospects and even lead to sharp retracements. Some governments have considered launching their own digital currencies. If that happens, these govcoins could theoretically compete with the stablecoins Terra offers. However, I am certainly keen to get some exposure to this crypto asset.
