Terra Crypto

Terra crypto is a stablecoin that depends on US dollars as a fiat currency, but its price relies on a cryptocurrency. It usually combines the benefits of both stablecoins and crypto coins. For example, citizens in the United States may use Terra (USDT) to make payments. Compared to market cap, Terra (USD) is the fourth-highest coin. 

The major advantage of Terra Crypto is that it has low transaction fees. Therefore, miners engage more in this mining. It is necessary to exchange equal amounts of currency or crypto with the stablecoin to hold Terra. Here, it is vital to convert LUNA crypto to mint Terra coins. For example, a user can purchase 200 Terra coins for $200. Or else, use three LUNA ($30) to buy equivalent coins. In this process, LUNA coins are burned, which helps develop Terra crypto. Likewise, it also helps create a price balance for the latter.

For LUNA to maintain this balance, there are specific criteria and requirements. So, let us look at them:

• If the USD crypto price is higher than> the Terra crypto price, LUNA will try to balance Terra with the USD. This will happen when the system mines more Terra and burns LUNA. 
• But, if USD < Terra crypto price, the protocol will mine more Luna and simultaneously burn Terra coins. 

As a result, the miners will receive rewards and various incentives. Simply put, it maintains the right weight on both sides.

The ignition of the terra crypto dates back a few years. In 2018, Terra crypto founders Daniel Shin and Do Kwon came together for this startup idea. The former was an enthusiastic entrepreneur, and the latter had already created an e-commerce platform called "Ticket Monster." However, Shin noticed a huge waste of resources in the transaction fees. Slowly, the field of interest diverted to the payment industry. One day, Shin met Kwon as the latter was interested in the cryptos. Likewise, the boom of cryptocurrency had already started in 2017. Therefore, in 2018, the fiat currency-backed stablecoin was introduced.

Let us look at the steps on how to buy Terra crypto tokens from the exchange:

• Open a crypto trading account with any of the crypto exchanges. 
• Deposit some funds in the cryptocurrency wallet. Various options like debit cards, credit cards, bank transfers, etc. 
• Decide the number of tokens and investment amount. Likewise, a user can purchase desired coins. 
• Also, choose the type of wallet for crypto storage.

Let us look at the examples to comprehend the concept better.

Example #1

Let's say Jesin is interested in purchasing Terra crypto coins from an exchange. To get started, he needs to create a crypto wallet on the exchange platform, which will store his digital assets. Once his wallet is set up, Jesin buys LUNA or another cryptocurrency to fund his account. With an adequate balance in his wallet, he can then easily convert his purchased crypto into the specific Terra coins he wants. This process allows him to seamlessly acquire and manage Terra coins within his exchange wallet.

Example #2

Proposal 11487, which aims to re-peg TerraClassicUSD (USTC) using a divergence protocol and buyback mechanism, is currently up for voting on Terra Station, with the voting period ending on April 29, 2023. This proposal, introduced by Redline Drifter, addresses USTC unidirectional swaps and staking issues, marking a significant effort to restore the value of USTC, which lost its dollar parity in May 2022, leading to a hyperinflated supply of Terra Classic (LUNC). While several re-peg proposals have been introduced over the past year, many failed to pass governance voting, and those that succeeded are yet to be fully implemented.

The proposal suggests implementing an algorithmic peg divergence fee and a buyback protocol to stabilize USTC. The divergence protocol would charge a dynamic fee based on the difference between the peg and market price, using the collected fees to buy back USTC and maintain its peg. However, as of now, the proposal has garnered 51.39% "Yes" votes, with 21.61% opposing, while key entities like Allnodes and LUNC DAO have abstained from voting, leaving the proposal's future uncertain.