Terra is an algorithm stable currency platform, which runs on the proof of stack (POS) built by tendermint, which is the bottom layer of the equity proof blockchain.
Luna is Terra’s platform token, which is used for the issuance of terrasdrs, price stabilization mechanism and network governance.
Users can use Luna tokens to exchange for terrasdrs stable coins and vice versa. The price stability of such a stable currency is guaranteed.
Luna is the mining coin of Terra dpos blockchain, and Terra is supported by Luna. Therefore, miners provide stability and safety. In the exchange, the agreement relies on transaction fees and Seigniorage to provide stable mining incentives under all economic conditions.
Terra is designing a price stable digital currency, which will provide a driving force for the next generation blockchain payment network. Terra has established a global e-commerce alliance with sustained growth of users, bringing the low-cost advantages of blockchain transactions to merchants and consumers. Terra’s goal is to connect digital currency with practical applications, grow into an open platform for innovative financial decentralization application (DAPP), and realize the real growth of blockchain economy. Terra was founded by a group of business, finance and blockchain technology experts with offices in Singapore and South Korea.
The price stability mechanism of Terra system depends on the Arbitrage Behavior of users. For example, when terrakrw, a stable currency of Korean won, falls to 0.95:1.00 in the price ratio of Korean won, users can use the encrypted currency of 95 Korean won to obtain 100terrakrw on the trading platform, and then exchange it to Terra platform to obtain Luna tokens worth 100 Korean won. If the price of terrakrw exceeds 1 won, users can exchange Luna tokens for terrakrw and sell it on the trading platform to make a profit.
Terra platform hopes to give predictable rewards to network maintainers no matter whether the network economy is good or bad. Terra uses transfer fees and Luna token destruction to hedge against changes in unit rewards.