Last updated on March 19th, 2023 at 04:38 pm
Terraform Labs that founded the Terra cryptocurrency, now benefits from the project`s increasing publicity on the Korean market. In addition, the company recently announced that it is going to receive $150 million for the development and creating cryptocurrency projects operating on the top of the Terra blockchain. The funds should come from large investors such as Pantera Capital and others. Thus, it seems like the projects should prepare for a prosperous future. In this article, we will try to find out more about Terra (Luna) cryptocurrency. We will highlight its prospects and the scope of the draft.
What Is Terra and Luna Token?
Together with its partners, Terraform Labs have founded applications running on the top of the company`s blockchain. They enable tracking and recording its financial transactions connected with cryptocurrency. Thus, Terra is a blockchain project that Terraform Labs created, and Luna is a token. The company supports cryptocurrencies and applications, including the Terra U.S. Dollar, or UST backed to the US dollar. Terra is a stablecoin meant for decreasing volatility which is so regular for cryptocurrencies.
Some part of the Luna digital token is burned for the sake of minting UST tokens. The more the demand for UST tokens, the more Luna tokens must be burned. To some extent, such an effort of balancing provides stability for the stablecoin`s rate. Every time someone buys something with UST, one pays a transaction fee. And the fee is equal to the card transaction. Then the commission charged is allocated among those who possess Luna tokens, like a stock dividend.
The Terraform Labs Ceo is Kwon, who used to work for Microsoft in the past. He founded Terraform Labs together with his partner Daniel Shin back in 2018. Now Shin is the head of Chai payment application, which is also a Terra partner. They state many people in Korea used to pay for services with Terra crypto through the Chai service. Kwon states that the Terraform Labs company does not profit from the operations with Terra. It rather relies on funding from investors. Divergence Digital Currency Fund, Huobi Capital, and other large investors brought Terraform Labs $57 million. The information provided by PitchBook. The sum was an addition to the $150 million investment reported on July 16.
Terra’s Plans and Projects
The company founders aim to create the one digital financial system featuring cryptocurrencies and the one pegged to the Korean won, running on the Terra blockchain and not depending on the bank system or any fintech-app developers. The point is that the Chai payment service runs on the Terra blockchain and has received a wide application in Korea. People used to pay for the goods through Chai. And this caused growth for Terra. Besides, the Mirror trading application, connected with the company, also gained publicity and wide use in Chine and Thailand.
Kwon stated that the company would use all the remaining $150 million to support and found companies that create applications on the top of the Terra blockchain. Thus, little by little, Terraform Labs establishes a kind of bank system, uniting various groups and financial applications under one roof.
Besides cryptocurrencies and payment systems, Terraform Labs features other projects. One of them is the aforementioned Mirror app. It is meant for creating synthetic financial assets that imitate more traditional assets. It`s a kinda tokenized variant for corporate stocks. Another project that is worth mentioning is Anchor. It is high-income savings account for the group’s digital coins holders.
Prospects for Terra
It is yet too early to comment on Terra`s further development in the perspective of the worldwide application. Most operations through Terra-related cryptocurrencies occur in Korea and due to the mass use of the Chai application. So it is hard to say whether other countries will adopt crypto or not. So Terra still has much to do to catch up with large and popular cryptocurrencies and crypto giants.
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Terra blockchain is powered by a limited number of computers. That means a limited number of nodes supplying the system. That reduces delay that otherwise slows down financial operations processing. The point is that Terra is less decentralized than other popular platforms supplied by thousands of intertwined computing nodes worldwide. It makes Terra lag behind other projects.
Terra project is aimed at becoming the leader in ecommerce stablecoin payment and DeFi services in the world. The unique value proposition helps to speed up blockchain in Asian markets. The project has massive potential to receive wide usage on a global scale. Terra’s instant payments, discount system, and low commissions for product and services payments motivate sellers and clients to use the platform on a daily basis.
The Terra project seems to have excellent prospects for further development due to the large investment flow and wide adoption among Korean people due to the Chai instant settlements application. Besides, the platform provides many convenient tools suitable for everyday use. Supporting various applications built on the Terra blockchain, the project’s founders are aimed at establishing a kind of bank system. We see if the project gains world adoption or remains operating largely in the Asian area.