What is the Terra (LUNA) cryptocurrency, and is it possible to earn money on it ?

What is the Terra (LUNA) cryptocurrency, and is it possible to earn money on it?

What is the Terra (LUNA) cryptocurrency, and is it possible to earn money on it ?


Terra (LUNA) is a protocol unique in its structure, created for reliable storage of stablecoins. 

The functions of the Moon cryptocurrency include maintaining price stability, and the main purpose of the system is to assist all participants in the process, both sellers and end consumers. 

Below we will consider what are the features of the cryptocurrency, how it appeared, and on what principle it works. Separately, we will figure out how to buy, where to store it, and whether it is possible to mine it. Let's highlight the purchase options, pros, and cons.

The history of the Terra (LUNA) platform began in 2018 when Daniel Shin and Do Kwon decided to create a decentralized platform for fast and affordable payments. 

The main instrument of transactions is stablecoins, which are cryptocurrencies but are tied to fiat money.

Both founders are professionals. So, Do Kwon is a graduate of Stanford University, where he mastered computer science, and later created the company Anafi. 

For some time he was an employee at Microsoft and Apple. There he worked as a programmer, after which he switched to "free bread".

 Daniel Shin graduated from the Wharton Business School and has extensive experience in creating various kinds of startups.

In 2018, the initial financing stage was completed, during which it was possible to raise $32 million. Initially, the market received about 385.3 million LUNA coins.

 The initial investors were the exchange platforms Binance, Huobi Global, OKEh, and others.

The first batch of coins was distributed as follows:

Sponsors — 26%.

Employees/investors, reward payment — 20%.

Alliance Fund for the promotion of the project — 20%.

Reserve to ensure stability, platform support — 20%.

Developers/ researchers (Terraform Labs) — 10%.

Genesis liquidity is 6%.

The most important stages of development include cooperation with the company Chai (South Korea), which deals with payments via phone. 

In the summer of 2020, work started on the creation of the Anchor Defi protocol to generate income on deposits. At the beginning of 2021, the company received new financial injections of $25 million for the development of the project, and in July - another 150 million.

Specifications

Terra (LUNA) cryptocurrency is a promising payment instrument, which at the end of November 2022 has the following characteristics:


  1. The cost is 48.28 dollars per coin.
  2. Capitalization — $18.8 billion.
  3. The trading volume per day is $1.6 billion.
  4. The number of coins in circulation is 392.4 million.
  5. The total offer is 869 million.
  6. The maximum amount is 1 billion.
  7. The place in the rating by capitalization is 13.

What is Terra (LUNA) in simple words, the structure ?

Terra (LUNA) operates on a special ecosystem, which is a full-fledged financial structure. Built on a protocol that guarantees the stability of the network. The latter is focused on creating such an exchange tool that can be used on different platforms.

 It is based on the Seigniorage system, which, with an increase in the activity of participants, emits Terra tokens with subsequent conversion to Luna.

 Some of the earned LUNA coins are burned to reduce production volumes. Terra provides the modernization of the system with the help of a special blockchain.

This gives several advantages: reducing operating costs, speeding up calculations, and receiving discounts.

The ecosystem includes:

  • Validators. They are necessary to support full nodes and ensure consensus. 

           They are engaged in creating new blocks to receive rewards. Take part in the voting. 

           The 100 validators with the largest share are among the active ones.

  • Delegates. This group includes participants who store cryptocurrency and do not want to become validators. They transmit the votes relevant to the tokens to other users. 

          They receive part of the staking rewards, but they are also responsible as validators.

The ecosystem includes blockchain oracles, security mechanisms, smart contracts, and Defi platforms. At the same time, the system provides two types of coins:

  1. Terra. Stablecoins, the value of which is tied to the price of fiat money. Obtaining such assets is possible by burning LUNA.
  2. Luna is a cryptocurrency designed to control the volatility of the exchange rate. Provides control functions, namely, gives the right to vote/propose proposals. In parallel, it is used to ensure the stability of the system.

LUNA coins, in turn, are divided into three types:

  1. Being in a stakeout. Provide profit to validators/delegates. They cannot be moved outside the system or sold on the market.
  2. Available for transmission. They are used in the same way as other cryptocurrencies. They can be changed, sold, transferred, and perform other operations.
  3. Tokens at the withdrawal stage. They are in the process of debonding, which lasts three weeks. During this period, the cryptocurrency does not bring income to users, and cannot be sold. After 21 days, they switch to the first type.

The cryptocurrency is built on an open blockchain, and the price is tied to the current exchange rate of the ruble, euro, or dollar. To date, over 15 stable coins have been issued based on Terra, including UST, KRT, SDT, and others.

How it works

When creating the ecosystem, the developers provided two pools — Terra and Luna. Participants of the cryptocurrency network burn one cryptocurrency to get another. This feature creates harmony in the issues of demand/application and allows you to stabilize the prices of stable coins. 

In practice, the following situations may occur:

  • The value of Terra exceeds the price of the fiat money to which it is tied. To create an equilibrium, the Moon is burned and stable coins are obtained. 

          New cryptocurrencies contribute to an increase in the number of Terra, 

          as well as creating harmony in the issue of supply and demand. 

          Network participants create a stable cryptocurrency until the optimal price is reached. 

          At the same time, the pool decreases, and the cost increases.

  • The rate of Terra falls lower than that of Fiat. This is due to the growth of the application and a small activity of buyers. In this case, stable coins are destroyed and the Moon is obtained.

           The result is an increase in the shortage of coins and an increase in the price. 

           The process is relevant until the moment when the exchange rate does not stabilize 

            to the optimal level.

Consider an example on UST:

  1. The stable coin rate drops to $0.98.
  2. The participant takes the cryptocurrency at this price, opens a wallet, and in the "Market Swap" section changes UST to LUNA in a ratio of 1 to 1.
  3. The first coin is burned, and the second is created.
  4. The participant receives a profit of $ 0.02.
  5. Arbitrage continues, UST is destroyed, and management coins are created before the course is leveled. As soon as it reaches $1, the process stops.

Operations are carried out thanks to a blockchain project that runs on a PoS algorithm. A validator is selected to perform the work, which confirms the block, and all nodes strive to reach a consensus. 

If the link is rejected, another validator is determined. If successful, the block is signed and added to the chain. The commission received is distributed between validators and delegates.

Terra (LUNA) Features

The ecosystem structure includes many active protocols working on top of Terra. They are designed to ensure the operability and decentralization of the process. The interaction of all elements provides the following features:


  • The speed of operations. The protocol used is highly scalable. In 2021, the speed is 1000 TPS per minute, but in the future, this figure may reach 10,000. The developers claim that in case of increased load, another circuit can be connected. On average, one operation is processed for about six seconds.
  • Issue. The maximum number of coins is limited to 1,000,000,000 coins. But this is not the maximum parameter that can be increased. If the threshold is exceeded, the "extra" coins begin to burn to achieve equilibrium. How this happens is discussed above.
  • Provision. The Terra (LUNA) cryptocurrency has no collateral. The cost of a stablecoin is tied to the price of fiat, but the latter also has no support from gold or currency. Stable coins are formed after burning the same amount of Moon.

How to use

Cryptocurrency can be used to receive remuneration and participate in the management process. Holders have a direct impact on the development of the system by accepting/rejecting offers. The presence of one coin gives the right to have the same number of votes.

The management process takes place in several stages:

  • Creating an offer. To start voting, it is necessary to deposit at least 512 coins. The option is available not only to the developer but also to the system participants. Such an investment is necessary to protect against "attack" by different applications.
  • Voting. 14 days are allocated for this process. The following options are available as answers: for, against, abstention, veto.
  • Calculation of votes. To accept the proposal, three conditions must be met, namely, the participation of more than 40% of coins, the veto percentage is less than 33.4% and more than half of the votes in favor.
  • The embodiment of ideas. Deposits are refunded for all participants, except those who chose the veto option.

If, as a result of voting, more than 33.4% of users chose a veto, the proposal is rejected with the impossibility of further implementation, and the attachments are canceled. This approach is intended to protect against abuse.

How to get

Terra (LUNA) mining is impossible due to the algorithm features. At the heart of the cryptocurrency is not PoW, but PoS, which does not allow you to mine coins using GPUs or ASIC devices. At the same time, there are several alternative methods of receiving/buying.

Exchange platforms

Terra (LUNA) cryptocurrency can be purchased on more than 30 platforms, including Binance, Huobi, OKEh, and others. Both built-in capabilities and a decentralized protocol can be used for trading. 

The virtual coin is also available for purchase on the Binance exchange. To get a coin on this platform, do the following:

  • verify your account when using fiat money;
  • go to the "Spot Wallet" section;
  • find the coin you need and click "Trade";
  • decide on one of the available trading pairs;
  • create a purchase order, and select the type, number, and price (for limit orders).

Receiving via intermediary sites

To date, there are not so many sites that allow you to get the Moon cryptocurrency for fiat money. One example is the open money website. 

To carry out a transaction, you need to choose a direction and proceed to the execution of the operation. In this case, you must follow the instructions of the service.

Alternatively, you can use other platforms, such as BankomatOrg, Exchanger, and Exchange24. As an alternative, One Obmen, Cash-transfers, and Cryptohome sites are suitable. 

Note that with the growing popularity of the service, the number of platforms that allow the operation will also increase.

Purchase from a private owner

We cannot exclude the classic way of buying the Terra (Moon) cryptocurrency — through a person who is ready to sell it. In this case, the transaction takes place by agreement and at a pre-agreed rate. 

The disadvantage of the method is that there remains a high risk of getting caught by scammers. To find partners, you can use different forums and communities of interest.

How to make money

As an alternative to buying, you can consider different ways of earning Terra (LUNA). To do this, you can use the following methods.

Steaking

It implies participation in the role of a validator verifying operations and creating new blocks. The maximum number of such users is no more than 130, and the most impressive investors fall into this list. 

This method is suitable for owners of a substantial number of coins, and the delegate function is suitable for ordinary participants. The point is to delegate your coins to the validator and earn income.

Profit is generated from two sources:

  1. Commission for gas. It is added to transactions that are conducted on the Internet. Validators determine the minimum fee and disable operations that are less than the set limit.
  2. Payment for stability support. Funds are charged for each transaction. Payment is made in the form of two taxes — for the exchange of stable coins and for a cryptocurrency that provides the possibility of management.

Transaction fees go to delegates and validators, and the amount of profit is commensurate with the size of the bids. 

The approximate amount of income per year is up to 11%. Payment is made in stable coins and the Moon. The minimum blocking period is three weeks. 

The advantage for the stakers is that they participate in airdrops, which are carried out when launching different protocols.

Investing

When analyzing investment prospects, it is enough to look at the change in the price of Terra (LUNA) over the past year. Back in early 2021, the price of cryptocurrency did not exceed one dollar per coin. 

Already in November 2021, the price rose above $ 50. After that, there was a slight decline, after which the cost went up again. As you can see, in less than a year the rate has increased more than 50 times. This trend may continue in the future.

Trading

Fans of active trading can use the opportunities of trading — buying and selling in a short period. Unlike investing, transactions with the Terra (LUNA) cryptocurrency can take place within an hour or even several minutes. 

Various exchanges can be used for operations, including Bitfinex, OKEh, Polonix, Binance, and others.

Protocols

Another way to earn Terra cryptocurrencies is through the platforms that underlie the work of the ecosystem. For example, the Anchor protocol allows you to earn by holding stable coins in your wallet for 20% per year. Another option is to use the Mirror platform. 

Its essence is that the participant transfers a pledge obligation in exchange for assets. As a result, you can get coins from Amazon, Tesla, and other companies.

What does the Terra (LUNA) course depend on?

As is the case with other cryptocurrencies, the rate of the Terra (Moon) cryptocurrency depends on many factors. But there are nuances associated with linking coins to fiat money. 

In particular, the Terra exchange rate almost does not change, because it is tied to dollars, euros, and other money. As for the management coin, its value may fluctuate taking into account market factors. The factors influencing this process include:

  1. Decrease/increase in the value of Bitcoin.
  2. The situation in the cryptocurrency market.
  3. The development of blockchain projects engaged in the issuance of stable coins, for example, Tezer, Coinbase, Binance, etc
  4. The popularity of stablecoins on the Internet
  5. updates aimed at increasing scalability and increasing transaction speed.
  6. New information in social networks and news feeds related to the project and its development.
  7. Support of the platform by large investors.

In combination, the above factors lead to fluctuations in coins. Experienced traders use these indicators to predict the market movement and earn on the change in the price of Terra (LUNA).

Where to store?

The official wallet for Terra is TeraStation, which was created by the developers themselves. It is characterized by high reliability and the possibility of staking. 

If the investor is interested in long-term storage with maximum security, you can use the Nano S or X Ledger. As an alternative, other wallets are also suitable — Coin Wallet, Quppy Wallet, Ethos, Token Pocket, Huobi Wallet.

What to expect in the future?

The developers of the cryptocurrency do not offer a roadmap, so we can only guess about the further movement. At the same time, validators who have the right to vote do not stop at the results achieved. 

They are constantly involved in the development of the project and encourage positive innovations. At the same time, there are several areas in which further development is planned:

  1. Increasing the number of supported blockchains.
  2. Issue of new coins.
  3. Launch and promotion of Astroport.
  4. The growth of the number of protocols, etc.

Against this background, analysts put forward favorable forecasts for the further development of cryptocurrency. 

According to positive assumptions, by the end of 2022, the price of the Moon should reach $ 200-250 per coin. At the same time, it is not necessary to count on too rapid growth due to the binding of the main coin to the stable coins.

Results: pros and cons

In conclusion, it is worth highlighting the weaknesses and strengths of cryptocurrency, which should be taken into account before buying or investing.

Advantages:

  1. Originality and uniqueness.
  2. Focus on popularization and strengthening of faith in virtual coins.
  3. Interaction with large platforms.
  4. Great growth prospects.
  5. Support and listing of major exchange platforms.
  6. The opportunity to earn money on staking.

Disadvantages:

  1. Lack of a road map.
  2. Popularity is mostly in China.
  3. The youth of cryptocurrency and unclear prospects.

In general, Terra (LUNA) is a promising and high—quality project in all respects. It is based on stability and an increase in the level of trust in cryptocurrencies. 

The ecosystem underlying the platform has good scalability parameters and has already proved popular with the masses. At the same time, the protocol has been repeatedly checked by auditors and has been successfully functioning for more than a year.

For investors, such a tool is a reliable assistant in matters of hedging and saving funds in case of sharp fluctuations in cryptocurrencies, and for ordinary users, it is a chance to earn. 

Many users have already realized the prospects of the project and are actively investing money in it. An additional indicator is investments in the development of large companies that rarely invest in a "dummy".

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