terra blockchain review

Did you know in Jan 2022, LUNA was trading close to 100x from its Jan 2021 price? But the price was dragged down by the unfortunate Wonderland Rug Pull. 

Despite all this, Terra Blockchain has been going from strength to strength. According to DeFillama, it even surpassed the TVL of Binance Smart Chain by clocking an all-time high TVL of $20 Bn.

But those are not the only reasons why we think Terra holds potential. Its decentralized stablecoin UST is rapidly challenging the position of leading stablecoins like USDT, DAI, and USDC that could push LUNA to the moon. Therefore, in this article, you will discover more about this blockchain and how you can take advantage of its technology.

What is Terra Blockchain?

If you are coming across Terra for the first time, you need to know this. Terra was built in 2018 as a network of decentralized stablecoins. The main goal is to create a better digital financial system free of big banks and fintech app developers.    

Terra’s Mainnet went live in Apr 2019 and in July 2021 underwent Columbus -5 Mainnet upgrade which positions Terra even more strongly in the DeFi space. 

But from what we see, Terra is still in development. Yet, it essentially has everything to sustain the ecosystem that is building on top of it and that’s a good thing.

Terra Features

So, now let’s understand what Terra offers:

    • Home of the UST stablecoin 

UST is the most dominant stablecoin on Terra. UST remains its peg by a smart mechanism with LUNA, which not only stabilizes the price of UST but also captures value for Terra native token – LUNA. The idea behind UST is to provide a scalable alternative for DeFi in the face of serious scaling issues that other stablecoin leaders, such as Dai, are experiencing.

    • Proof of Stake Protocol:

According to its white paper, Terra operates on a proof of stake model, where validators verify transactions according to how many coins they hold. Proof of stake supporters says it is significantly less energy-intensive than other models and has less of an environmental impact.

    • Sophisticated smart contract platform:

In October 2020, Terra introduced this feature as part of the Columbus- 4 upgrade.  But, Terra smart contracts are not EVM compatible. Despite being a non EVM compatible network, Terra along with Solana accounted for 11% of the total TVL in 2021. That’s impressive.

    • Cross-chain Ecosystem:

Terra is one of the leading cross-chain protocols in the industry. The Terra bridge allows the movement of assets between Terra, Ethereum, BSC, Harmony, and Osmosis’s blockchain. It received a major upgrade in Columbus-5 in Sep 2021 to bring greater cross-chain interoperability. 

    • Inter-Blockchain Communication standard:

Both Wormhole and IBC bridges are now live on Terra. This promises a flow of capital from different chains to Terra and boosts the DeFi ecosystem. AMM and Lending expect to be the first sectors to capture the value of this capital inflow, increase liquidity then support the development of other DeFi stacks in Terra.

    • Cost Efficiency:

Transacting on the Terra blockchain is cheaper, instantaneous, and frictionless. With a decentralized base layer and a system purposefully designed to bypass needless hoops.

    • Speed:

Uses Cosmos Tendermint which allows for 10,000 transactions per second with a transaction time of around 2 seconds

With all this in place, we came to an interesting find. The number of Dapps on Terra is over 150, which is still quite small when compared with other giants like Ethereum, Binance Smart Chain. Despite that, according to DeFillama, the TVL of Terra is still in 2nd place, higher than Avalanche, Fantom, Polygon, and BSC.

Terra Station Wallet & Team

In the Terra blockchain, there is a wallet called Terra Station which you can download as a Chrome Extension, iOS, and Android wallet, or Windows and Mac.

In the Terra Station wallet, you can manage:

  • Staking: You can stake LUNA tokens with an 8.6% APY.
  • Swap: You can exchange UST with Terra-tokenized fiat currencies like EUT (wrapped euro in Terra’s blockchain) and many others.
  • Governance: LUNA holders can vote in proposals where the minimum amount of tokens is 50 with a 7 day voting period.
  • NFT: People can visualize the NFTs that they hold in their Terra Station wallets.

On the other hand,  Terra Alliance backs the Terra Luna blockchain. The alliance is an Asian corporation of 15 large e-commerce companies that move around $25 billion a year with a market of 45 million users worldwide.

Ecosystem & Latest Developments

Terra’s ecosystem is growing faster and stronger than ever before. At the time of recording, it has $14.4 billion in TVL. Real State, betting, E-Commerce, investing, staking, derivatives, are some of the sectors where the devs community has built dApps for. Here is a big shot of the Terra ecosystem.

terra ecosystem

Source: Coin98insights

On the other hand, here are the latest developments of Terra at the time of writing this article:

  1. Terra has proposed to invest in sponsoring an American sports franchise to make the brand go mainstream.
  2. Anchor’s users will be able to deposit UST inside the Leap wallet where they can make one-click withdrawals 
  3. UST holders can now make deposits on Huobi’s exchange with 20% APY.
  4. In Beefy Finance, there is a UST-AVAX pool with 55% APY 
  5. Columbus-5 Update: Modification to the project’s tokenomic model.
  6. The Terra blockchain is very popular in South Korea. Terra blockchain powers the Chai payments app in South Korea, which has seen adoption by over 2 million users.

Token Analysis and Risks

At the time of writing this article, according to Coingecko, the native token of Terra, the LUNA token, has a circulating supply of 401.3 million which represents 40% of the max supply. Also, LUNA has a $22 billion marketcap and a $1.4 billion 24-hour trading volume. Moreover, the use cases for LUNA are:

  1. Governance Voting.
  2. Pay fees.
  3. Participate in the ecosystem.
  4. Be a node validator.
  5. Make transactions using the wallet

But all cannot be rosy right? Terra’s fees are low – Avg. Tx fee ($): 0.1 – 1% with several types of fees to be paid:

  1. Gas – the computational fees: Tobin tax – a fixed percentage fee added to any market swap between Terra stablecoin denominations. The rate varies depending on each Terra stable.
  2. Spread fee: Spread fees are added to any market swap between Terra and Luna

It has another fee too, the stability fee tax. Thankfully this fee is no longer charged. If you are a validator or a delegator, you are subjected to slashings. When you delegate your stake, you take the risk of it being slashed if the validator meets one of the slashing conditions. When this occurs, validators and delegators have their LUNA holdings slashed, leading to a loss of assets and profit from staking.

Finally, another possible risk of Terra is based around stablecoins and financial systems; there could be future regulations that affect the value and utility of Luna.

LUNA Price Prediction

LUNA is trading above the support zone of $46.02. If it stays above this support zone, we could start seeing a reversal and move towards $55.96, $66.89, $71.77, $87.58, and $113.16. Failure to hold the support at $46.02 could lead to a continuation of bearish momentum towards $37.83 and $33.10. Look at the following chart to see what we are talking about.

LUNA price prediction

Source: Altcoin Buzz

LUNA and Terra’s wrapped fiat tokens are having more value every year because they offer secure, private, and profitable digital assets.

As we mentioned before, the main goal of Terra’s blockchain is to be the decentralized platform behind worldwide payments. Therefore, this network can be fully scalable to fill the gap that conventional payment methods have created. 

Finally, we hope you’ve learned a lot from this review so you can look at this blockchain with different eyes from now on.

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