When Bitcoin first launched in 2008, it started a massive digital economy that now comprises countless different cryptocurrencies. Many of them are traded as investments and new ones are being developed all of the time.
Some of those new coins will appear and disappear in a matter of months as they get lost in the crowd. However, there are some that stick out because they change the way that we use cryptocurrencies and make them a more viable alternative to the traditional economy. Terra Luna is one of those coins.
The Rise and Fall of Terra LUNA
Terra was first founded in South Korea in 2018 by Do Kwon and Daniel Shin. A year later, they were ready to launch their new cryptocurrency project. The whole aim of Terra was to create cryptocurrencies that could realistically be used by people to make transactions on a daily basis.
The big problem with existing crypto is that the price moves a lot. Say, for example, you want to buy something and you can either use normal currency or some Bitcoin. Your Bitcoin is likely to increase in value over the next few years, so you’ll want to hold onto that and use normal currency instead. Similarly, a business won’t want to accept payment in a volatile cryptocurrency that could be worth half as much in the next few weeks.
Terra aims to solve this problem with Terra LUNA. Terra is an umbrella for many different stablecoins that are tied to the value of traditional currencies. However, unlike traditional stablecoins, they are not backed by the currencies themselves, they are backed by a coin called Terra LUNA. When the value of the coins change, Terra LUNA is either burned or created to alter the supply and keep the price stable. For example, you hold some coins that are backed by the US dollar. The value starts to increase so they are now worth significantly more than $1 each. So, some of the Terra LUNA is transferred into more coins, increasing the supply and therefore reducing the value until the coin is worth $1 again.
By stabilizing the currency, Terra makes it viable for everyday use and pushes the crypto revolution forward. Since the launch, Terra grew steadily but the ecosystem eventually crashed and the value dropped significantly. You can see the current values at okx.com to track the progress of the currency.
LUNA 2.0
Since Terra LUNA launched, it has been gaining traction, but the crash was a big setback. Although it goes a long way towards improving the crypto space and making it a viable alternative to the current economy, Terra needed to reset and rebuild after their earlier failures.
The original LUNA still exists as an algorithmic stablecoin, but it has now been joined by LUNA 2.0. The new coin will not replace the old one, but it will be used for all new application developments.
Only time will tell whether Terra can recover their position and establish themselves as leaders in the cryptocurrency revolution.