Hi everyone, today I decided to drop two episodes, hope you enjoy them :)
If you are interested to the previous posts of this series, check it out here:
What is it?
Terra is a blockchain network that today offers three primitives of the financial world: payment possibilities, investment opportunities (and exchange of securities) and savings provision.
- Payments: Terra and its token are needed in the field of e-commerce. The company was founded by Daniel Shin and Do Kwon, two Koreans who had already been involved in the creation of payment systems widely used in Southeast Asia and Korea and also in the development and foundation of several e-commerce systems. With Terra you can pay using various self-developed stablecoins, which have an immediately convertible value.
- Savings: through the Anchor system you can block liquidity within the project to obtain returns. These are high returns compared to what banks can offer today, but still relatively low in the context of the cryptocurrency market. The positive note is that you can - here as happens on many other networks - also block sums in stablecoins, thus remaining outside the natural fluctuations of crypto tokens such as LUNA.
- Investments: The same company that manages Terra also founded the Mirror system, which integrates an intelligent system for the tokenization of financial and non-financial assets in the same blockchain. For example, we can create a token that exactly represents the value of Apple Shares, or any other publicly traded security. The token will be exchangeable within the network and can be converted into cash at any time. The system is thus integrated along the three primitives of the economic system: that is payments, investments and savings, with intelligent and innovative solutions that have made Terra one of the most interesting projects of 2021. However, we will also have to understand how, within this ecosystem , the relative LUNA token is used, which actually has different modes of use.
How does it work?
There are several aspects that must be considered when we deal with Terra, that is the different components that are now integrated in this project, components that work both in an integrated way and as a stand-alone one, in a design choice that allows everyone to use only the useful part for their needs.
- Payment system through App: the basic aspect of the Terra system (LUNA) is the payment network, which is already very popular through the CHAI App in South Korea and MemePay in Mongolia. The system is widespread, is accepted by many online shops and already moves around 1 billion dollars every year. Active users are over 2 million, for a project that is rapidly expanding. In this case, the Terra network acts as a decentralized intermediary, which allows you to move stablecoins from one wallet to another. Simple and immediate, as we are used to seeing in the old generation blockchains.
- The stablecoins: they play a central role at least until today. The price is anchored to the official currency price with a free system based on arbitrage. For each stablecoin token issued, there is an equivalent in LUNA. As the demand for Luna grows, arbitrage situations arise that the network participants have an interest in bringing back into balance, because these are operations with very easy gains. In the case of higher demand for Luna, this is reflected in a relatively distributed gain on the network.
Where to store it?
The best hot wallets for LUNA are TerraWallet, TrustWallet and Atomic Wallet. If you want more security, a cold storage like Ledger or Trezor is the right choice.
Pros&Cons
*DISCLAIMER* These lists are subjective, it depends from person to person
Pros
- Vertical ecosystem
- Stablecoins
- DeFi
Cons
- Tough competition
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