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What is Terra?
Launched in testnet in January, 2018, Terra started its mainnet operations in April, 2019.Terra is a brainchild of Korean serial entrepreneurs Daniel Shin and Do Kwon. Mostly, it is known by its core native asset Terra (LUNA) and stablecoin TerraUSD (UST) commonly referred to as ‘Terra currencies’. According to CoinMarketCap’s data, Terra’s assets rank No.11 and No.54 by aggregated market capitalization.
TerraUSD (UST) is among the world’s fastest growing stablecoins; experts expect it to replace DAI by MakerDAO as the largest decentralized stable asset.
How does Terra handle transactions?
As of early Q4, 2021, Terra blockchain has 130 validators while theoretically its design allows 300+ validators to connect. In accordance with Terra consensus design, to become a validator, LUNA holders should lock his/her assets for 21 days minimum.
Despite Terra development progress being curated by Terraform Labs, LUNA holders can have a say in referendums about crucial protocol upgrades.
Technically, Terra utilizes Cosmos software development kit (SDK) and Tendermint algorithm of block production.
What is special about Terra’s stablecoin minting?
As such, in order to mint 1,000 UST, a Terra user needs to burn 1,000 U.S. Dollars in his/her LUNA tokens equivalent. Conversely, to mint 1000 LUNA, a corresponding amount of TerraUSD should be burnt. Therefore, when the price of UST is too high or too low, LUNA holders are incentivized either to buy UST or burn their LUNA.
This methodology allows TerraUSD stablecoin to be more volatility-resilient, capital efficient and scalable compared to previous generation stablecoins that utilize over-collateralization.
Which blockchains can seamlessly interact with Terra?
Anchor passive income protocol and TerraSwap DEX are two most popular Terra-specific dApps while it also hosts elements of multi-blockchain services Lido Finance and Mirror Protocol.
On Sept.30, 2021, Terra activated Columbus-5 upgrade that allows it to interact seamlessly with Cosmos (ATOM) and a number of other networks that utilize an Inter-Blockchain Communication Standard or IBC.
By the end of 2021, Terra might integrate the Wormhole Bridge protocol that currently connects Ethereum and Solana. In turn, Wormhole team shared the plans to connect Polygon and Binance Smart Chain to its ecosystem of interoperable protocols.