There is so much going on in the decentralized finance scene that experts believe it is the future of digital investments. On a regular basis, new coins are being launched in the DeFi ecosystem and many of them are performing really well. Terra is one of the hot coins at the moment, and investors are recognizing its potentials.
So, what is Terra? Should you invest in Terra (Luna)? And where can you buy Luna? You may have several other important questions about Terra and the native currency Luna, and we will try to answer the questions that can help you make a sound decision about investing in the coin.
Before we start answering these important questions, it is important to note that we are not going to give you investment advice here. We are simply going to analyze and discuss Terra in a manner that will help you understand the cryptocurrency and its ecosystem properly.
It is important that you read every part of the post carefully as you will find the information that can help you make a sound decision about investing in Terra.
- What Is Terra?
- A Brief History of Terra
- How Does Terra Work and What Makes Terra Unique?
- More about Luna
- Should You Invest In Terra?
- Is Terra A Safe Investment?
- Major Reasons to Invest In Terra
- Reasons to Reconsider Investing In Terra
- Where Can You Buy Terra Luna?
- Best Platform to Buy Terra Luna
- What Next After Buying Terra?
- Key Points to Keep In Mind
- Final Words
What Is Terra?
Terra is a special blockchain project that seeks to power price-stable global payments. It is primarily a blockchain protocol that is designed specifically for transferring stablecoins, using them to power a range of cryptocurrencies and financial apps. It is considered as a next-generation stablecoin protocol that maintains the price of its US Dollar-pegged token (UST) by variable issuance.
Terra is not a regular stablecoin like Tether and the rest. Rather, it is a unique cryptocurrency platform that helps to maintain stability in the market. By focusing on the transfer of stablecoins and having a unique stablecoin of its own, Terra ensures that payments on its network don't fluctuate with the cryptocurrency market.
Terra is considered an integral part of the DeFi subsector. Unlike most DeFi protocols, Terra is built on Cosmos rather than Ethereum. Of course, Cosmos is known to have some operational benefits over Ethereum, including faster transactions and lower transaction fees. This, however, does not imply that Terra is better than other protocols built on Ethereum.
Like other cryptocurrency protocols, Terra has a native currency, which is called Luna. As hinted earlier, it also has a US Dollar-pegged token, which is simply called UST. To maintain stability within the Terra network, the native currency Luna is minted and burned in relation to the supply of UST. This mechanism solves many of the issues faced by other stablecoins like Tether.
As the governance token of Terra, Luna rules the Terra network. It serves as a proxy for the valuation of the network and also serves as an investment vehicle. It is the primary digital currency you will need to buy as a regular investment in Terra.
Terra also offers a unique way to make money through a flourishing DeFi ecosystem called Anchor, which provides arbitrage opportunities and claims to offer as much as 19.4% fixed interest rate on UST deposits. Another wonderful advantage of the Terra USD-pegged token (UST) is the fact that it can be used on other blockchains, including Solana and Ethereum.
A Brief History of Terra
Terra was founded by Daniel Shin and Do Kwon in January 2018. The two primary actors started by opening up a South Korean-based firm called the Terraform Labs, which is the company behind Terra and its entire network.
Before they founded Terraform Labs, Shin and Kwon had successful careers outside the blockchain scene. Shin had previously founded and headed a notable South Korean e-commerce platform called Ticket Monster or TMON as well as a startup incubator called Fast Track Asia. Kwon had previously founded and headed a startup called Anyfi, which focused on providing decentralized wireless mesh networking solutions. He serves as the CEO of Terraform Labs.
Upon conception, the primary goal of the Terra project was to drive the rapid adoption of cryptocurrencies by focusing on price stability and usability. The development of the protocol took a while. Its mainnet was eventually launched in April 2019 and has grown significantly. At the time of writing this piece, Terra offers stablecoins pegged to the US Dollar, South Korean Won, Mongolian tugrik and the IMF’s Special Drawing Rights basket of currencies. There are concrete plans to roll out more options in the new future.
How Does Terra Work and What Makes Terra Unique?
You don’t have to be told that Terra is not like other cryptocurrencies. For a start, the protocol focuses on stablecoins without entirely being a stablecoin. In fact, the native currency of Terra is not stablecoin but Luna.
Terra boasts of a programmable infrastructure that offers several critical features, including providing the market with self-stabilizing stablecoins. It relies heavily on an elastic monetary supply mechanism, adjusting the supply of stablecoins to ensure that their values are constantly in tandem with their underlying assets.
To comprehensively explain how Terra works, we present brief summaries of the different aspects of the network:
- Governance – the network operates a community-based governance mechanism, which is important in DeFi. Any validator can propose a change or update and other validators will have to vote to approve or reject the proposal.
- DPoS Consensus – stands for Delegated Proof-of-Stake consensus, which requires validators to approve transactions and add blocks to the blockchain. Validators are top Luna holders and receive LUNA as rewards for their efforts.
- Stablecoins – these are the available tokens on the network pegged against fiat currencies, including TerraUSD (UST), pegged against the US dollar, TerraKRW (KRT), pegged against the South Korean won, TerraMNT, pegged against the Mongolian tugrik, and TerraSDR (SDT), pegged against the IMF’s SDR basket of currencies.
- Anchor Protocol – a unique protocol that allows Terra users to stake their stablecoins and earn passive income and also take loans with liquid-staked PoS assets as collateral.
- Mirror Protocol – which allows Terra users to create fungible assets called synthetics and also facilitate minting of a mirror asset (mAsset).
- GAS – which is required for executing smart contracts, just like in Ethereum. GAS incentivizes miners and eliminates spam on the blockchain.
Read Also: How To Stake Terra (LUNA)
More about Luna
Luna is the native token of Terra. It serves as the governance token and the primary investment asset. Luna provides liquidity to the Terra network, making it possible for users to execute smart contracts and enjoy the benefits of decentralized finance.
As the governance token and primary investment asset in Terra, Luna can be used for the valuation of the network. It is the asset you need to study to determine whether to invest in Terra or not. Also, the simplest way to invest in Terra is to buy and sell Luna.
There are currently 400,872,746.77 Luna in circulation, which is approximately 40% of the proposed total supply of 994,790,279 Luna.
Should You Invest In Terra (LUNA)?
From what we've discussed so far, it is easy to tell that Terra (LUNA) is a relevant decentralized global payment system. It brings something unique to decentralized finance and the entire cryptocurrency universe. However, that is not enough reason to conclude that it is an incredible investment.
Investing in Terra sounds like a very good idea but there is no need to conclude yet. It is important that you make the decision to invest or not to invest. To guide you properly, we will discuss the good sides as well as the possible bad sides of investing in Terra. Before that, we need to consider whether it is safe to invest in Terra.
Is Terra (LUNA) A Safe Investment?
The security of your investment should be the most important thing to consider when making a decision. So, how safe is Terra as a platform for investing?
The terra network boasts of a fully-developed blockchain that is secured using a proof-of-stake consensus algorithm. It is also based on a technology known as Tendermint, which is described on its official website as a powerful and secure software for the decentralized future.
As mentioned already, Terra operates a community-based governance mechanism that requires validators to approve transactions. Validator nodes are also offered additional guidance on the best practices to keep the network secure while performing their duties.
The Terra network has been audited. CertiK, a blockchain verification and penetration testing firm, completed the audit in May 2019. The network architecture, its coding language, as well as its economic model were thoroughly examined. The security auditors concluded that the “modelling and mathematical reasoning” of Terra was “sound.” It was also tested against market manipulation and found to be secure.
Major Reasons To Invest In Terra (LUNA)
Knowing that Terra is a very safe platform for investment, you are probably motivated to start investing. Here are 10 important reasons to invest in Terra:
1. Terra Has a Unique Approach to Bringing Stability to the Market
Instead of creating a stablecoin that looks like what others have done, Terraform labs has created a platform that hosts different stablecoins with another native currency that helps to keep them stable. The unique mechanisms employed in the Terra network helps to circumvent most of the problems that hold regular stablecoin platforms down.
2. Terra Is an Ambitious Platform That Can Reach New Heights Pretty Fast
Terra currently has four categories of stablecoins, and there are plans to add more. It is also a global payment solution that facilitates the transfer of these stablecoins without sacrificing stability. Terra has also launched Anchor, a protocol that facilitates saving, staking, and borrowing. There is no telling what the team is up to. It is an ambitious project and has the infrastructure to transform the DeFi sector and the crypto market in many ways.
3. Terra Facilitates Faster Transactions than Most Other Platforms
One of the advantages Terra has over Ethereum and Ethereum-based cryptocurrency is speed. It is able to complete transactions much faster than most crypto platforms and this attracts more users. As more people choose to use Terra, the network will grow bigger and the value of Luna will be boosted too.
4. Terra Offers Lower Fees than the Average Cryptocurrency Platform
Another quality of Terra that attracts users is low transaction fees. Though security is what most experienced investors consider first, most people will choose a platform that charges lower when they are presented with two or more options. Terra is a cheaper alternative to most stablecoins and will attract more users with time. Of course, this will always have a positive impact on the value of its native currency.
5. The Terra Blockchain Is One of the Biggest Moneymakers
It is not often that we consider the revenue of blockchains in determining their relevance. However, Terra has surprised everyone, which is why we have to consider the fact that it has already become one of the top five cryptocurrencies in terms of revenue. It is only behind Ethereum, the Binance Smart Chain, and Bitcoin, as then neck and neck with Polygon in terms of revenue. That is a big feat for a blockchain that was released in 2019.
6. Terra Is Becoming a Respected Member of the DeFi Community
If you are an avid cryptocurrency follower you will know that decentralized finance, commonly called DeFi, is the new gold rush in the industry. Terra, as a platform, leans towards DeFi and is fast becoming a force to reckon with in the scene. DeFi is likely to revolutionize several aspects of the world financial systems. Terra will become a lot more useful and valuable at that point.
7. Terra Has Multiple Stablecoins Tied To Different Relevant Fiat Currencies
Unlike platforms like Tether, DAI, Binance USD, and many others, Terra has multiple stablecoins that are exclusive to its network. There are about four categories of stablecoins and plans to add more. As hinted earlier, this approach offers several benefits. It makes it easy for users to make payments in different fiat currencies without paying exorbitant fees.
8. Terra Has Launched a Savings and Lending Protocol Called Anchor
Terra has launched an incredible protocol called Anchor that allows users to use the network just like a decentralized bank. Users can save their stablecoins and earn interest. They can also borrow from the network, using their staked assets as collateral. The best part is that it is easier to save or borrow from Terra than what you will experience in a standard bank. Terra can also be staked, giving users opportunities to earn passive income without selling their assets.
9. Terra’s Native Currency (Luna) Is Performing Pretty Well
The native currency of Terra (Luna) has performed exceptionally well despite being a new digital coin. Launched in 2019, the coin has already become the 12th ranked cryptocurrency in terms of market capitalization. In less than 18 months, the coin moved from its all-time low of $0.1199 (Mar. 13TH 2020) to an all-time high of $103.33 (Dec. 27, 2021). Though the price has dropped in recent times, most experts believe it will rise considerably even before the end of this year.
10. Luna Has Been Listed In Many Exchanges, Boosting Liquidity
Liquidity is another important factor to consider when investing in a digital coin and it is mostly determined by the number of places you can buy and sell the coin and a few other factors. Luna is currently available in many exchanges, including Huobi and Bitfinex where it can be traded against fiat currencies, stablecoins, and other cryptocurrencies. You can also safely buy Luna from reputable brokerages like eToro.
Don't Miss: Terra Price Prediction For 2025 And 2030
Reasons To Reconsider Investing In Terra
While there are several wonderful reasons to invest in Terra, there are also interesting reasons to think twice about that. Here are some of the reasons you may want to reconsider investing in Terra now:
1. Terra Is Relatively New
Terra was conceived in 2018 and launched in 2019. It is still considered a new cryptocurrency, which means there is still an element of uncertainty about its future. Though it has proved to be a successful platform so far, no one can tell for sure what will happen in five years’ time. It is always better to invest cautiously when a coin is less than five years old.
2. While Terra’s Stablecoins Are Truly Stable, Luna Is Volatile
It is easy to confuse the stablecoins of Terra with Luna, the native governance token and primary investment asset. While the stablecoins are tied to fiat currencies and maintain their respective values, Luna is like every other regular cryptocurrency. It is a volatile currency, which means it can lose value just as it can gain. In fact, Luna is very volatile, which makes it a risky investment. To take advantage of this, you need to pay close attention to the market and play smart. Otherwise, you will most likely lose money while trying to make profits.
3. Terra May Face Increased Regulation As It Expands
Terra was launched in South Korea but is quickly expanding to other countries and regions of the world. While this may sound like a good thing, it can still present several challenges for Terra, the native currency (Luna), and the stablecoins. It is aiming towards becoming a true borderless digital bank – the sort most regulators want to avoid.
4. Govcoins Will Pose a Real Threat to Terra
Many governments around the world have realized that it will be near-impossible to regulate cryptocurrencies, even though they know there are benefits to digital currencies. Most governments have decided to launch digital versions of their currencies to keep up with cryptocurrencies. Such central bank digital currencies will reduce the need for stablecoins, and that will really affect Terra and similar platforms.
5. Terra Has a Long Way to Catch Up With Projects like Ethereum
Though Terra has come up the ranks rather quickly, it has not been truly tested. In fact, Terra has a long way to go to catch up with bigger platforms like Ethereum. Again, since it is operating in the DeFi subsector and is not built on Ethereum, it is at a disadvantage to some extent.
Where Can You Buy Terra (Luna)?
Do you intend to invest in Terra? Then Luna is the cryptocurrency to buy. But where can you buy the token? Well, the commonest place is a cryptocurrency exchange. Though Luna has not been listed in all major exchanges, it is available on many of the popular ones.
Besides cryptocurrency exchanges, there are a few other places to buy Luna and other cryptocurrencies. Progressive brokerage companies have started allowing users to trade cryptocurrencies, just as they trade stocks and other assets. One of the most popular and reliable brokerages for buying and selling cryptocurrencies is eToro.
Besides cryptocurrency exchanges and brokerage companies, you can also buy cryptocurrencies from some apps that are run by reliable companies that are connected to cryptocurrencies. Such companies may not be classified as official exchanges or full-service brokerages, but they allow you to buy digital assets.
Best Platform to Buy Terra Luna
The fact that we mentioned that you can buy cryptocurrencies from different platforms does not necessarily mean it is safe to do so. Apps that are not official cryptocurrency exchanges or brokerages are generally risky. Though there are many that are run by reputable companies, some are run by fraudulent individuals who are just after your money. Even the real ones may have little to no helpful features and poor customer service.
Cryptocurrency exchanges are mostly safe for buying cryptocurrencies. However, it may be risky to leave your digital assets on a cryptocurrency exchange for a long time. Some experienced investors don’t use exchanges for obvious reasons, including privacy concerns.
Since it is considered risky to use cryptocurrency exchanges and apps for buying and selling cryptos, brokerages are obviously the best options for smart investors and traders. eToro is considered one of the best social trading platforms, and it is a full-service brokerage.
eToro is considered as one of the best places to buy cryptocurrencies not only because it is a brokerage company. eToro is safe and reliable. It also boasts of several helpful features that make buying and selling cryptocurrencies easier. There are trading features that will also improve your chances of profiting from your crypto investments and trading activities.
What Next After Buying Terra?
Buying Terra (Luna) is only one aspect of investing in cryptocurrency. What you do with the coin and when you choose determines how profitable your investment can be. But before you start thinking of selling, you need to know how to keep your digital assets safe pending when the market is favourable to sell.
Cryptocurrencies are stored in digital wallets. As you should expect, there are several digital wallets out there. Of course, all digital assets are not made equal, so you need to be careful when choosing a wallet for your crypto assets. You need to consider such factors as the security features, compatibility with the coins in your portfolio, backup features, ease of use, and more.
If you choose to buy Luna or another cryptocurrency from eToro, you will save yourself the headache of looking for a digital wallet if you don’t already have a reliable one. eToro offers its users an easy-to-use, multi-token, and safe digital wallet. The brokerage creates a safe haven for online investment.
eToro – The Best Platform to Buy Terra
eToro have proven themselves trustworthy within the Crypto industry over many years – we recommend you try them out.
Virtual currencies are highly volatile. Your capital is at risk.
Key Points to Keep In Mind
So far, we have covered a whole lot about Terra and its viability as a good investment option for cryptocurrency lovers. Here is a recap of the key points to keep in mind:
- Terra is a decentralized cryptocurrency platform that aims to bring stability to the cryptocurrency scene by facilitating fast and affordable transfer of stablecoins.
- The native currency of Terra is Luna, but it also hosts a number of stablecoins, including TerraUSD (UST), TerraKRW (KRT), TerraMNT (MNT), and TerraSDR (SDT).
- Terra requires the use of GAS to execute smart contracts.
- Terra has launched a protocol named Anchor that allows users to save, stake, and borrow digital assets. This protocol positions Terra as a dynamic borderless bank.
- Terra allows users to create fungible assets using Mirror protocols. These assets are called synthetics and are created by locking the value of the assets in Terra stablecoins or another Mirror asset as collateral.
- Luna, the native currency of Terra, can be staked by users who want to earn passive income while HODLing their tokens.
- Terra uses a community-based governance mechanism that is customized to improve network security.
- Luna has performed really well, though it has been on the cryptocurrency market for less than three years.
- Luna is volatile while the stablecoins of the Terra network are pegged to fiat currencies and maintain their values at all times.
- Terra is a safe and reliable network and LUNA coin has climbed the ranks quickly to become one of the biggest cryptocurrencies by market capitalization.
Before investing in any cryptocurrency, smart investors research properly. You need to understand a cryptocurrency platform, how it works, and how its native currency has performed before determining whether it is a good investment.
Here, we have discussed some of the most important things you need to know about Terra. At least, you can tell that Terra brings something unique to the cryptocurrency scene. It completely redefines what a stablecoin platform should feel. You can also tell that Luna, the native currency of Terra, has performed well in a short time of existence.
Clearly, investing in Terra can be a very good idea. Those who invested in the early days and waited until a few weeks ago must have made fortunes. However, Terra may face adversities in years to come once central bank digital currencies become widespread and regulators start going after decentralized, borderless banks. At the moment, it is a good investment option for those who can wait for a few years.