Terra (LUNA)

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Terra is a blockchain protocol that uses fiat-pegged stablecoins to power price-stable global payments systems. According to its white paper, Terra combines the price stability and wide adoption of fiat currencies with the censorship-resistance of Bitcoin (BTC) and offers fast and affordable settlements.

Development on Terra began in January 2018, and its mainnet officially launched in April 2019. As of September 2021, it offers stablecoins pegged to the U.S. dollar, South Korean won, Mongolian tugrik and the International Monetary Fund’s Special Drawing Rights basket of currencies — and it intends to roll out additional options.

Terra’s native token, LUNA, is used to stabilize the price of the protocol’s stablecoins. LUNA holders are also able to submit and vote on governance proposals, giving it the functionality of a governance token.

Features of Terra

  • Low fees
  • Fast transactions
  • Easy to use interface
  • Decentralization
  • Stablecoin Market
  • Interoperability

Advantages of Terra

  • Terra caters to the stablecoin market due to its high demand and convenience. They can easily be used to avoid market volatility and hence once can safeguard their investment.
  • Terra blockchain can perform hundreds of transactions per second. Terra transactions are usually settled within six seconds & only cost a few cents to execute. 
  • Terra Station user interface is very slick and easy to use with mobile apps also available.
  • Terra provides a blockchain framework to create a digital financial system where banks and governments are not required.
  • It is one of the best decentralized stablecoin. 

Disadvantages of Terra

  • Future regulation risks associated with cryptocurrencies.
  • It allows only 100 active validators or block producers which are keeping the network stable.
  • Various governments all over the world have started preparing for CBDCs. Terra’s stablecoins could get hit if the stringent laws are incorporated negating stablecoins.

Conclusion

LUNA has performed incredibly well this year and may continue to go from strength to strength. But all cryptocurrencies are risky, and there’s a lot of uncertainty surrounding the outlook for stablecoins right now. Make sure you understand how that environment might unfold before you invest.

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