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token overview, features and storage

Terraform Company Labs Korea became famous thanks to the creation of an algorithmic stablecoin UST and coin LUNA. AT 2022 year LUNA token came close to $ 120 per coin, then within a month the rate collapsed to zero. How the history of the coin began and what recovery plan was developed by the creator of the blockchain Do Kwon – this will be discussed in this article.

Cryptocurrency development

The idea of ​​the project came from two South Korean developers who sought to create a payment system with the cheapest possible transactions. The blockchain technology was taken as the basis, with the help of which a decentralized project was launched in 2019 Terra, specializing in stablecoins.

Cryptocurrency Terra token launched using the toolkit of another cryptocurrency project – Cosmos (ATOM). The mechanism of internal interaction of blockchains was borrowed, which allows minimizing commissions when transferring Terra stablecoins between different networks.

The global goal of the project is the introduction cryptocurrencies into a person’s daily life. The Terra blockchain made it possible to create not only stablecoins, but also decentralized applications. The idea of ​​the creators is that the coins should have been introduced into banking chains, payment gateways and payment systems with bank cards. The main problem on the way to the end consumer is the volatility of cryptocurrencies, which would prevent a person from paying for goods. Therefore, in Terra, the emphasis is on stablecoins – coins with a fixed price, which duplicates the prices of fiat currencies.

If we talk about Terra in a familiar and understandable language, then we can describe the composition ecosystems So:

  • stablecoins – UST, KRT, SDT, MNT and others, their rate is pegged to national fiat money or other assets;
  • LUNA coins are an internal token that absorbs the price volatility of stablecoins.

For the functioning of the system, two pools were developed, allowing you to burn one coin and get another. The algorithmic mechanism allows you to maintain a balance between stables and Luna tokens. All transactions take place thanks to a high-speed blockchain that runs on the DPoS (delegated proof of stake) mechanism.

Terra is designed with the following features in mind:

  • the emission of the coin is endless, tokens are burned or generated as needed (cryptocurrency seigniorage);
  • stablecoins and management assets are not backed by anything (no gold or foreign exchange backing);
  • coin holders participate in management and make key decisions related to the development of the blockchain;
  • network validators are rewarded.

Cryptocurrency now

Blockchain Terra in the moment overtook Binance Smart Chain in terms of capitalization, closely “squeezing” Ethereum. Blockchain Terra has found real application in Asian countries. It was integrated into financial applications, allowing you to pay for purchases, trips and make other transactions. The second place in the DeFi coin sector did not last long. Bad news came on the night of 10 to 11 May 2022 – UST stablecoin approached 60 cents per coin, and the LUNA token began trading at about $2 per token.

A small “historical digression” will allow you to assess the current state of the coin. Consider the latest events that happened to the LUNA coin for 2021-2022:

  • numerous listings, here are the most popular exchanges that have added LUNA to their trading pairs: OKEx, Kraken, Bitfinex, Crypto.com Exchange and others;
  • a major update of Columbus-5 was introduced, which made it possible to increase the smoothness of the network and interact with a large number of third-party blockchains;
  • staking launched on Binance — traders got the opportunity to freeze LUNA tokens and receive rewards in cryptocurrency for this;
  • the LUNA main network block number 5701000 marked an update and a soft fork – non-critical changes were made to the network that did not lead to the generation of forks (new coins that appear as a result of the blockchain branching);
  • launch of PRISM Farm – the protocol allows you to stake LUNA and receive rewards in the form of new PRISM tokens.

The high-quality activity of the project did not save it from the “scam” status, which means deception in the cryptocurrency world. Current price of the asset is approximately one ten thousandth of a US dollar, which equates to 0.5 Satoshi (one Satoshi is one hundred millionth of bitcoin). And the market capitalization fell below 1 billion. dollarswhich is comparable to 30,000 Bitcoins.

Luna cryptocurrency prices

The reason is simple – a large “whale” sold LUNA tokens, receiving 70,000 in return BTC. A critical mass of UST tokens was also sold. The panic in the market and the deliberate dissemination of false information led to the collapse of the exchange rate and the total liquidation of positions. The UST rate got rid of the official US dollar rate and flew into the abyss. A separate article is devoted to this circumstance, so let’s consider the plans for the restoration of LUNA, which were announced by the creators of the project.

Company Before Kwona threw all her efforts and means to restore the exchange rate of the LUNA and UST coins, but all attempts ended in failure. However, more recently, Terra network users and coin holders have come to a consensus. Final and approved by the participants plan looks like this:

  1. A new Terra blockchain is being created that does not have an algorithmic stablecoin;
  2. The old blockchain will be called Terra Classic (similar to Ethereum Classic, in the blockchain of which there was a “hard fork”). Existing Terra Luna coin will henceforth be referred to as Luna Classic (ticker – LUNC).
  3. The new chain will be called Terra, and the new coin will be called Luna – ticker LUNA.
  4. The newly generated coin will be distributed among the following network participants: stakers and ordinary holders of the Luna Classic coin, residual holders former UST stable, significant investors and developers of Luna Classic.
  5. The main wallet of the developers will not participate in the distribution of new coins, they will become the property of the network members in full.

1,500,000 million people voted for the final plan, which led to an 80 percent approval. Only 20% of community members voted against. Such support represents a kind of hope for salvation. The start of the transformation is scheduled for the end of May 2022. However, the prospects for the project remain very vague.

Features of LUNA and stablecoins

Let’s start with features Moon is a coin considered native token Terra platforms. The main function is to maintain the functioning of the ecosystem. Some of the coins are staked, so the frozen coins ensure the stability of the platform and bring income to the owners. Cryptocurrency Terra Luna coin performs the following functions:

  1. Luna provides existing stablecoins. Users can freely convert between coins.
  2. The latest update introduced the system to burn/generate Luna tokens when needed, which contributes to a balanced supply.
  3. Cryptoplatform management – Terra Luna token allows holders to vote and decide the future of the project.
  4. Investors are often interested in the question – how many Luna tokens in total. The issue of coins is considered unlimited and is supported by the system independently. The collapse caused the generation of new coins – their number approached the 7 billion mark.

The main feature is maintaining the balance of the ecosystem. An increase in demand for stablecoins leads to an increase in the price of the Luna coin. This principle worked until recently, whether it will work again – the question remains open.

The Terra blockchain allows users to issue their own fiat-pegged stablecoins. This fiat analogue is used to purchase other coins on the exchange, as well as purchases and other transactions. By using Terra stables, users can experience the following benefits and features:

  • low network commission, fast transactions;
  • exchanges and other cryptocurrency services also take small commissions for transactions with algorithmic stablecoins;
  • blockchain is decentralized and secure (in the recent past).

Terra stablecoins were untethered from the dollar. There are several reasons for this:

  • lack of collateral with real assets (gold, dollar);
  • low decentralization was revealed (a significant part coins ended up in the hands of one participant who brought down the market).

Storage LUNA

Storage LUNA

The coin is actively bought, transferred and issued as a staking reward. Popular Luna coin – cryptowhich should be stored in the following ways:

  • on the cryptocurrency stock exchange – it is worth placing funds on such sites only for a short time, after transactions, withdrawing coins to cold wallets;
  • mobile or “light” wallets – they do not download the entire blockchain on the device’s hard drive, all information about the wallet is usually stored on the application developer’s server;
  • cold desktop wallets – contain all the information about the block chain, therefore they are considered optimal for storing Luna coins;
  • hardware wallets – physical devices containing a private key are the most secure of all crypto wallets.

The following applications can be recommended: Atomic Wallet, Luna Wallet, Metamask. If we consider hardware devices, then the leaders are Ledger and Trezor. These wallets don’t care how many Terra Luna coins store and at what distance – they will ensure safety in any case.

Cryptocurrency delisting

Despite the collapse and complete collapse, exchanges are in no hurry to remove trading pairs that contain the LUNA coin. Binance has disabled margin trading, company employees noted that the fall in the rate is lower 05 thousandths of the dollar will trigger the launch of delisting. Therefore, the largest exchange will soon turn off trading in LUNA and UST. The following platforms have already been delisted:

  • ApolloX;
  • WazirX;
  • Bybit;
  • OKX (the exchange has suspended perpetual contracts);
  • Crypto.com Exchange.

Results

The LUNA coin absorbed original ideas, got a bright start and showed a significant rise. The project turned out to be vulnerable, because the fraudulent activities were planned in advance. Developers are also under suspicion. Therefore, the collapse was no less enchanting. The coin is hardly whether will be restored, only the Terra 2.0 project, which is in the process of launching, can get a new round of “life”.

The materials presented in this section do not constitute individual investment advice.

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