What is Terra? Here is Everything you need to know about this Hot Cryptocurrency

Terra has now become a rising hot cryptocurrency. Here is your guide to it.

With the most popular cryptocurrencies like Bitcoin, Tether, Dogecoin, etc. extremely oscillating in their values from the past few months, Terra being a stable coin is stealing the spotlight with its quite easily predictable prices.

Terraform Labs, which oversees the Terra cryptocurrency project, on this Friday said that investors like Arrington Capital, Lightspeed Venture Partners, and Pantera Capital have pledged $150 million to help it incubate various crypto projects that are connected to Terra.

Here is everything you need to know about Terra:

What is Terra?

Terra is a blockchain project developed by Terraform Labs. It powers the start-up cryptocurrencies and other financial apps. The start-up cryptocurrencies include the Terra U.S. Dollar or UST, which is pegged to the U.S. dollar through an algorithm.

Terra is a stable coin that intends to reduce the volatility occurring to cryptocurrencies like Bitcoin. Some stablecoins, like Tether, are pegged to more conventional currencies, like the U.S. dollar, through cash and cash equivalents as opposed to an algorithm and associated reserve token. Terra is an algorithmic stable coin that powers the blockchain payments network, at its core. It aims to become the first widely used cryptocurrency by pushing adoption through a formidable e-commerce alliance, which includes Asia-Pacific giants such as TMON, Baemin, Carousell, Qoo10, and Tiki.

Terra keeps its price steady through a mechanism commonly used by the world's central banks by increasing and decreasing the money supply. This means that as Terra's economy and transaction volume grow, we can use money supply growth or what's called 'seigniorage' to fund discounts that benefit retail consumers. The value proposition to the end-user is simple: enjoy the same checkout experience you've become accustomed to at a 5–10% discount made possible by Terra's monetary policy.

"Another big altcoin winner of the week is Terra (LUNA), a native token of the namesake protocol for issuing fiat-pegged stable coins, – up by 30.86%. The token seems to have found its footing after the volatility it saw in May subsided. On July 7, Terraform Labs, the project's creator, committed approximately $70 million to boost the reserves of its savings protocol Anchor. LUNA's market capitalization has leaped from $300 million to $3.4 billion since January". States Forbes.

Terra is now lead by the South Korean Firm, Terraform Labs, which was founded in 2018 by Daniel Shin and Kwon. Kwon is a 29-year-old former Microsoft employee; Shin now heads the Chai online payment service, a Terra partner. Kwon said many Koreans have used the Chai service to buy goods like movie tickets using Terra cryptocurrency.

Terra's Plans

Terraform Labs plans to use Terra's blockchain and its associated cryptocurrencies, including one pegged to the Korean won to create a digital financial system independent of major banks and fintech-app makers. So far, its main source of growth has been in Korea, where people have bought goods at stores, like coffee, using the Chai payment app that's built on Terra's blockchain.

In addition to cryptocurrencies, Terraform Labs also has a number of other projects including the Anchor app, a high-yield savings account for holders of the group's digital coins. Meanwhile, people can use the firm's associated Mirror app to create synthetic financial assets that mimic more conventional ones, like "tokenized" representations of corporate stocks. These synthetic assets are supposed to be helpful to people like "a small retail trader in Thailand" who can more easily buy shares and "get some exposure to the upside" of stocks that they otherwise wouldn't have been able to obtain, Kwon said. But some critics have said the U.S. Securities and Exchange Commission may eventually crackdown on synthetic stocks, which are currently unregulated.

The Critic's Perspective

Most of the critics believe that Terra still has a long way to go to catch up to bigger cryptocurrency projects like Ethereum.  Korea has been the center of most of the financial transactions involving Terra-related cryptocurrencies, where its founders are based. Although Terra is becoming more popular in Korea thanks to rising interest in its partner Chai, it's too early to say whether Terra-related currencies will gain traction in other countries. Although the tradeoff, Terra is less "decentralized" than other blockchain platforms like Ethereum, which is powered by thousands of interconnected computing nodes worldwide. This could make Terra less appealing to some blockchain purists.