On 25th May 2022, a proposal was approved to reissue a new Luna cryptocurrency and to decouple from and abandon the devalued UST stable coin. The original blockchain is now known as Terra Classic, and the original tokens are officially renamed as Luna Classic(LUNC) and USTC. The new Luna coin is called "Terra 2.0(LUNA)" by investors, and has lost valuation in the opening days of being listed on exchanges.
Terra Classic (USTC, LUNC) are no longer connected to Terraform Labs and Do Kwon.
Both USTC and LUNC have since stopped minting of new tokens with significant supply reduction events and repeg plans, receiving continuous support by Binance and Weex.
Terra distinguishes itself through several key features:
Stablecoin Architecture: Terra's stablecoin, (USTC), maintains stability by leveraging a combination of algorithmic and collateralized mechanisms. This stability makes it an attractive medium of exchange and store of value within the blockchain ecosystem.
Proof-of-Stake(POS) Consensus: The consensus mechanism used by the Terra blockchain to validate transactions and secure the network. Unlike Proof-of-Work (PoW) systems, where miners compete to solve complex mathematical puzzles to validate transactions and create new blocks, (PoS) relies on validators who are chosen to create new blocks and validate transactions based on the amount of cryptocurrency they hold and are willing to "stake" as collateral.
In the Terra PoS system, token holders can stake their Terra tokens to their preferred validators or delegate their tokens to existing validators. Validators are responsible for proposing new blocks and validating transactions.
The PoS mechanism in Terra incentivizes token holders to actively participate in network security and governance by staking their tokens. Validators are rewarded with transaction fees for their role in securing the network. Additionally, token holders who delegate their tokens to validators can earn rewards in the form of staking rewards.
PoS consensus mechanisms offer several advantages over PoW, including increased energy efficiency, reduced centralization risks, and scalability. By utilizing PoS, Terra is able to achieve a secure and decentralized network while incentivizing active participation from token holders in the validation process.
This ensures the integrity and stability of the Terra blockchain while enabling efficient transaction processing and network scalability.
Interoperability: Terra have since been upgraded to Cosmos SDK 0.47, IBC go v7, and Wasmd 0.45.0 to be interoperable with other blockchains, allowing for seamless integration with various DeFi protocols and applications. This interoperability enhances liquidity and expands the utility of Terra's native tokens.
Decentralized Finance (DeFi) Ecosystem: Terra hosts a vibrant ecosystem of DeFi applications and protocols, including decentralized exchanges (DEXs), lending platforms, and yield farming protocols. These applications leverage Terra's stablecoin infrastructure to facilitate efficient and cost-effective financial transactions.
Decentralized application (DApp): A type of distributed, open source software application that runs on a blockchain network rather than on a single computer. Currently there are multiple in development DApps among different genre : NFT, Gaming etc..
Governance Mechanisms: Terra employs decentralized governance mechanisms to empower token holders to participate in protocol upgrades, parameter adjustments, and decision-making processes. This democratic approach ensures community involvement and fosters a sense of ownership among stakeholders.
Scalability and Efficiency: Terra's blockchain architecture is designed for scalability and high throughput, capable of handling a large volume of transactions with minimal latency. This scalability is essential for supporting widespread adoption and accommodating the growing demand for decentralized financial services.
Overall, Terra represents a sophisticated and robust blockchain ecosystem that is reshaping the landscape of decentralized finance. Its innovative stablecoin technology, interoperability, decentralized governance, and scalability make it a compelling platform for developers, investors, and users seeking to participate in the burgeoning DeFi economy.
