Though the world has various successful cryptocurrencies like Bitcoin, Ethereum, and Bitcoin revolution terms of price and value over the last few months, there are still many people that are in search of stable coins such as Terra to put their money in. People are going after Terra due to its stable and predictable prices.
The Terra cryptocurrency is administered by Terraform Labs and this Lab has benefited a lot in gaining popularity. The Lab as well as its partners have developed an application tool that runs on the company’s blockchain and assists in keeping a life-long and shared track of the organization’s financial records of transactions that are specifically crypto-related.
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Terra is just like all other blockchain projects. It is powered and funded by Terraform Labs. Terraform Labs not only powers the cryptocurrencies but also the startup’s cryptocurrencies and financial applications. These cryptocurrencies include the Terra U.S. Dollar or UST, which is linked to the US dollar by a mechanism.
Terra also comes under the category of stablecoins which was developed to reduce volatility rife with cryptocurrencies such as Bitcoin and others. There are some stable cryptocurrencies such as Tether that are linked to more predictable currencies as in U.S. dollar via cash and other equivalents of cash as divergent to a consensus mechanism and connected to reserved tokens.
To mint more US Terra (UST) tokens, a particular ratio of another virtual token and reserve asset, Luna is burned. If the plea for UST escalates with more people utilizing this currency, more Luna tokens will be robotically burned and diverted to the people. This act of balancing is to assist in stabilizing the value to some extent.
Luna is known to be directly benefiting from the economic growth of the Terra economy and it also goes through the contractions of the Terra. When someone purchases something such as an ice cream via UST, that transaction will produce a fee just like the transaction of a credit card. That fee is then circulated to people who are the owners of Luna tokens, like a stock dividend.
Plan of Terra Cryptocurrency
The Terraform Labs have a plan to utilize the blockchain of Terra and its connected cryptocurrencies that also include the ones pegged to the Korean currency won that will help in developing a global financial system sovereign of major banks and fintech application makers. Up to this point, the main source of development and growth of Terra has been in Korea where people have already started purchasing goods from shops such as coffee by using a payment app called Chai payment that is created on the blockchain of Terra. The company’s trading applications are growing in China and Thailand.
In the meantime, Kwon has declared that Terraform Labs will be using its latest $150 million in funding and power to invest in groups that will develop the financial applications on the blockchain of Terra. Furthermore, He compared scouting to investing in other groups similar to a “Y combinator demo day type of scenario.” Which was a reference to the quite famous startup field event managed and organized by infancy period investor Y Combinator.
Moreover, the grouping of all these Terra-based financial apps displays that Terraform Labs is creating something very similar to banks, said Ryan Watkins, who was in the post of senior research analyst at cryptocurrency consultancy Messari.
Along with the cryptocurrencies, Terraform Labs has a variety of other ongoing projects that includes the Anchor application, a high revenue saving account for investors and holders of the group’s crypto coins.
For the time being, people are allowed to use the company’s associated Mirror applications to develop synthetic financial assets that copy more stable ones such as tokenized representations for company stocks. The main purpose of these synthetic coins is to be helpful to people like small traders in Thailand who can have access to shares and get some more exposure to the benefit of stocks that they would not be able to get access to.
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To conclude, Terra still has a long way to go to turn out to be a bigger crypto project like Bitcoin or Ethereum. The blockchain of Terra has a limited number of nodes. The interchange Terra has is much less decentralized than any other blockchain such as Ethereum which is known for being powered by thousands of interlinked computing nodes all over the world.