The Terra network develops into a comprehensive blockchain of fiat-pegged stablecoins. In general, Terra is reliable and programmable comprehensive blockchain e-commerce platform that provides more stability and integration options than its competitors when conducting cross-border payments. LUNA is Terra’s staking token. One interesting concept is that Terra is reliant on LUNA as well as several other stablecoins that are pegged to many of the world’s top fiat currencies including TerraUSD (UST). Because of the frequent usage of fiat currencies, the Terra crypto ecosystem is able to offer low fees stablecoins, instant settlement, and seamless cross-border exchange to power retail transactions.
The Crypto Payment Model Of Terra (LUNA) and Asian eCommerce
The global economy in essence is highly dependant on digital payment systems that have already been used for decades. Unfortunately, most of them evolve slowly, and today’s payment solutions tend to be locally confined, reliant on rent-seeking intermediaries, and built to operate on outdated infrastructure. With ApplePay, SamsungPay, KakaoPay, Alipay, and 45+ others in use, Asia’s digital payments industry is extremely crowded. A variety of undifferentiated products function without having a clear revenue model or core product value. Hence, the high user acquisition and retention costs.
In order to improve efficiency for payment service providers and increase value for customers in the growing Asian e-commerce market, Terra has built a next-generation blockchain payment network that sets a new almost all-inclusive approach. With the realization of this project, Terra has helped in the build of an e-commerce alliance with 15 initial partners that account for a combined USD 25 billion in GMV (Gross Merchandise Value), and a 45 million-strong customer base.
Designed to challenge incumbent retail payment apps Terra was built using Cosmos blockchain technology that gives its advantage overall. Terra manages to circumvent the entire existing fragmented payment infrastructure with its comprehensive end-to-end payment solution. With its model that allows to potentially saves payment service providers hundreds of millions of dollars per year, Terra technology differentiates itself from competitors with discounted transaction fees — charging only 0.5% to 2%, while 2.5% to 3% is the industry norm.
Stablecoins on Terra and its Native Coin LUNA
Terra stablecoins are used by Terra’s partners to initiate the usage of Terra’s network for retail payment services. Stablecoins are global fiat currencies that are cryptographic versions with enabled smart contracts altogether built to reduce the volatility commonly associated with digital assets. Many coins are present on the network including TerraCNY, TerraGBP, TerraUSD (UST), TerraJPY, TerraKRW, TerraEUR, and the International Monetary Fund’s TerraSDR currently available to be used in a wide range of global marketplaces. With this new approach, significantly easier instantaneous swaps of Terra stablecoins and seamless cross-border value exchange are established. What is even more attractive to users is the employment of instant settlement and extremely low fees for use by anyone, anywhere.
In other terms, Terra’s stablecoins provide seamless transactions and the stability of fiat currencies. What is convenient ground in comparison to other networks is that Terra’s crypto network uses its native LUNA currency as a utility and governance token to adjust to dramatic fluctuations. The key responsibility here is dedicated to LUNA coin which operates the collateralizing mechanisms that back and secure the price stability of the Terra network’s stablecoins. This means that LUNA coins act as a buffer to regulate the value of other stablecoins. The Stablecoins on the Terra network have a flexible and elastic supply that fluctuates according to the needs of Terra’s collateralization mechanism. Furthermore, using its Proof-of-Stake (PoS) consensus mechanism, the LUNA coin is used as part of Terra network validator staking.
Terra Station, Terra’s proprietary wallet, is accessed directly now through the Terra blockchain network by many of Terra’s merchant partners and customers that require simplification of processes. What is also another innovative implementation is that Terra’s staking utility token LUNA and all Terra stablecoins are supported by Terra Station as well as Anchor Protocol (ANC) and Mirror Protocol tokens (MIR). Additionally, all other Terra ecosystem assets are supported by Terra Station which makes everything readily available. Amazing for its flexibility and ease of use the Terra wallet, now allows users to interact with numerous Terra-based decentralized applications (dApps). In order to swap tokens, delegate LUNA to validators, and manage funds these decentralized applications are built on a platform that allows users to seamlessly perform everything they need.
With the Terra, Station merchants are now able to set up point-of-sale payment integration for instantaneous purchases and settlement. This is accomplished with the integration of a specialized suite of open application programming interfaces (APIs). Furthermore, the Terra Station is designed to operate as both a mobile and web-based wallet.
Discount Model Incentivized by The Terra’s Network LUNA-Coin-
All of the fiat-based stablecoins like TerraUSD, TerraKRW, TerraEUR, and TerraSDR are balanced and equalized thanks to the design of the Terra protocol maintaining a balanced equilibrium on the go. Through the usage of specialized algorithmic spending and stable coin circulation data gathered directly from the Terra blockchain, the system makes sense of the data and maintains equilibrium. However, the key role and the perpetrating responsibility to this rebalancing act is dedicated to LUNA.
How this ingenious design and model work is according to the overall demand for TerraUSD (and other stablecoins like TerraJPY, TerraGBP, TerraCNY). They expand only when transaction volume across Terra’s large network of payment service providers increases. Meaning that Terra must algorithmically issue new LUNA coins to maintain price stability.
In opposition, Terra automatically buys back more LUNA and burns the excess supply only when the Terra crypto network’s payment transaction volume decreases.
With approximately 380 million current market supply of LUNA, the Terra platform’s token burns via its equilibrium methodology. With this methodology, the Terra network can destroy as much as 58 million LUNA at one time. Employing the LUNA coins into the equations which now have a total supply of just under one billion, allows Terra to manage its stable coin monetary policy with robust levers but remain subject to a degree of supply volatility.
Accessible and Interoperable Terra Crypto Platform
On top of the Terra network, software engineers can now build their protocols and dApps that are implemented in the Terra ecosystem featuring this as a development platform and blockchain-agnostic framework. Terra network includes two main decentralized finance (DeFi) protocols. The Anchor Protocol allowing users the opportunity of incentivized staking yield services, and Mirror Protocol, which enables the creation and usage of the synthetic asset.
Additionally, the protocol aims to become fully interoperable with other leading Layer-1 blockchain solutions besides the other user-attractive services being built in the Terra crypto ecosystem. This means simultaneously movement of tokenized assets and other data to and from multiple blockchains. Starting from April 2021 and with more network integrations to come in the future Terra stablecoins are available for cross-chain asset transfer between the Terra blockchain and the Ethereum and Solana blockchains. DApp userbases can now be exposed through Terra by developers to Terra’s payment infrastructure in a permissionless, trustless manner. Furthermore, there is another convenient ease of process for users called the Terra Bridge. This web-based service allows users to send Terra, Anchor Protocol, and Mirror Protocol, assets back and forth between Ethereum and Binance Smart Chain (BSC).
CosmWasm is the integrated smart contract development framework that allowed Terra to accommodate this development. Using Rust, Go, or AssemblyScript programming languages that can then run on multiple blockchains through the Cosmos Inter-Blockchain Communication (IBC) is allowed precisely by CosmWasm enabling developers to build smart contracts Protocol framework. With the IBC model and other specialized mechanisms, Terra stablecoins and other Terra ecosystem assets can be used for numerous DeFi applications including on-chain swaps, oracles, lending, borrowing, staking, synthetic assets, and the list could become endless in the future.
Terra is pursuing to turn into the main e-commerce and business stable coin currency and comprehensive DeFi provider on the planet. Terra’s exceptional offer is contributing to the acceleration of the blockchain in the Korean and Asian business sectors, while its fundamental uses can be incorporated on a worldwide scale. Terra’s rebate model, instant settlement, and amazingly low charges for item buys boost traders and purchasers to use the platform. The Terra Station wallet, the innovative way to deal with application and blockchain advancement, and the cross-chain value transfer feature allowed through Cosmos’ interoperable IBC arrangement, and the Terra Bridge together produce a developing blockchain environment that keeps on extending.
If you are starting with blockchain we suggest you go and read our article Blockchain – The Beast Has Awaken To Revolutionize The World Unpredictably
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