What is TerraUSD?
Terra USD (aka UST) is the native stablecoin of the Terra blockchain. It exists on other blockchains such as Ethereum and Solana. It uses algorithms to keep stable, benefit the users and its community. Stable coins are Crypto assets that claim to be pegged by fiat money, and their prices remain constant as opposed to coins or tokens.
Terraform Labs created the LUNA blockchain project to fully empower the startup’s cryptocurrency TerraUSD or UST using algorithms to mitigate chances of fiddling prices. The main goal is provide widespread adoption by appealing to two concepts:
- Ease of use for consumers
- Reduced fees for businesses
Do Kwon founded TerraUSD for Next-Gen Support
Terra was the brain-child innovation of Do Kwon and Daniel shin, launched in April 2019. After 17th months, on September 12, 2020, they created TerraUSD in alliance with Bittrex Global. It’s adoption has outperformed many competitive stablecoins such as GUSD’s Gemini and PAX (Paxos). Do Kwon has been rated one of the most influential people in blockchain by Coindesk for 2021.
Do Kwon and Daniel Shin are the founders of Terra. TerraUSD is the creation of Terraform Labs, South Korean firm. Do Kwon is the CEO of the Terraform Labs. Formerly, Do served as Software Engineer at Microsoft and Apple. Forbes 30 under 30, Asia 2019, listed him as a successful entrepreneur in the world.
At present, Shin leads the Chai online payment service. Daniel Shin is an economist and is regarded as an entrepreneur. Previously he co-founded companies like fast-track Asia, which helps startups develop their business, and TMON ticket monster, an E-Commerce platform in South Korea.
Why is Terra Better?
TerraUST is a tri-solution offering crypto:
- It provides a scalable solution to the DeFi platform and solves the scalability challenges most stablecoins like market leader Dai face.
- It is an Interest-bearing coin that is pegged to the US dollar.
- It allows easy interchain movement of TerraUSD, UST to every major blockchain.
How does TerraUSD work?
TerraUSD(UST) uses LUNA, the native crypto of Terra, as an on-chain reserve asset held in the smart contracts and is burned to get TerraUSD. For instance, if you want to mint one TerraUSD, you will burn Terra’s LUNA token equivalent to the 1$ worth of Terra’s LUNA. There are community proposals to burn LUNA to create UST, the most of recent of which, was passed on November 13 2021, and burned $4.5 USD Billion to create more UST.
What Makes UST Special
There three clear benefits that UST provides over the alternates, USDT, DAI and USDC, which all operate solely on the Ethereum network. The ethereum network is struggling to reduce gas fees causing transactions to be expensive, regardless of the token.
It offers barrier-less scalability to the DeFi market, addresses the existed scalability issues, and boosts the crypto space by supporting DeFi apps & protocols. Scalability is provided by the LUNA network which is based off the COSMOS SDK. These capabilities allow transactions to occur quickly in a determinate way that prevents tampering.
Maximum Interchain operability
TerraUSD uses a bridging protocol, entitled Dropship, to integrate TerraUSD into DeFi projects & DEX platforms. Its interchange operability allows easy movement of UST between blockchains ensures price stability and a higher level of liquidity on Defi platforms. This will ultimately help to increase both market capitulation and use-case scenarios for further integration with other DeFi protocols.
Other protocols, such as USDC, is created solely by Coinbase and this limits the growth because of regulations that limit how the USDC can be utilized. UST aims to be highly decentralized with a system of delegators and a fully community driven proposal network for voting on changes.
Interest Bearing Passive Income
Users can earn passive income using TerraUSD stablecoin with a 20% APY interest-bearing bond issued by the Anchor protocol. Anchor is a lending and saving protocol that promises a return of around 20% on UST savings instead of Coinbase’s USDC and the MakerDAO’s DAI returns of 14% and 12%, respectively. Additionally, users can gain steady income as rewards in Proof of Stake chains.
What are the Terra’s plans?
Terra plans to develop an independent digital financial system with its blockchain and linked cryptocurrencies from the intervention of major banks and financial apps. Currently, people are buying goods from stores using the Chai payment application built on the Terra crypto blockchain in Korea. This will be a system separate from banks that will allow a USD equivalent to be used for everyday purchases, this is much more efficient than other cryptocurrencies.