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Crypto money that doesn't look like crypto: Terra (LUNA) in 5 🖐

Crypto money that doesn't look like crypto: Terra (LUNA) in 5 🖐
By Fernando Gutierrez • Issue #65 • View online

What is Terra (LUNA)? 🌏 🌔
Terra is an open and transparent monetary platform built on Cosmos. It was launched in 2020 and is gaining a lot of adoption in the Asia-Pacific region.
It offers a set of algorithmic stablecoins and tools to provide users with all they need to manage their money.
TerraUSD (UST) is their biggest stablecoin, and I’ll use it in examples, but everything applies to the others too.
Algorithmic stablecoins work differently from centralized ones in which the equivalent fiat money is held in reserve (like USDT or USDC).
In algorithmic ones, there are automatic mechanisms that maintain the price using arbitrageurs and a second token. In this case, Terra uses LUNA, the network token, to stabilize their stablecoins.
Terra’s biggest tools:
  • CHAI is a payments gateway that uses UST to settle and offers lower fees than traditional gateways. Users who use UST to pay receive some extra incentives. It has gained significant traction in South Korea, with more than 2 million users (5% of the population).
  • MIRROR allows decentralized investment in traditional assets, like stocks. Their biggest user base is in Thailand, where buying foreign stocks is extremely difficult.
  • ANCHOR is their savings and borrowing platform. It offers savers a fixed 20% rate per year. They can pay so much because they do over-collateralized lending (with UST, but they plan to add others) and then stake the collateral on major PoS networks. They have deposits of more than $350 mn, $400 in collateral, and loans of $125 mn.
The Terra ecosystem focuses on utility and ease of use.
All the pieces work together, thanks to LUNA. The system is designed so the price of LUNA increases if the demand for UST grows, which will happen if their tools are successful.
Also, since the tools are complementary, they push each other forward because there are advantages for users when they use all of them.
A few links
Last few words
Of course, this is not financial advice yada yada yada.
You can lose money even with stablecoins, so think about what you do and make your own decisions.
I’m catching up with crypto concepts and projects daily for 50 days straight. Please reply to this email if there is something that you would like me to cover.
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Cheers!
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Fernando Gutierrez

I'm catching up with crypto projects and concepts in a few paragraphs for at least 50 days straight.

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