Terra is a blockchain protocol utilizing fiat-pegged stablecoins to facilitate price-stable global payment systems. As detailed in its white paper, Terra integrates the price stability and extensive adoption of fiat currencies with the censorship resistance of Bitcoin (BTC), providing fast and affordable transaction settlements. The development of Terra commenced in January 2018, with its mainnet officially launching in April 2019. As of September 2021, the platform offers stablecoins pegged to the U.S. dollar, South Korean won, Mongolian tugrik, and the International Monetary Fund's Special Drawing Rights basket of currencies, with plans to introduce additional options. On May 28, 2022, the genesis block of the new chain was launched to conduct future transactions under the name Terra (LUNA), resulting in the rebranding of the original Terra chain as Terra Classic. The original native token, LUNA, has been renamed LUNA Classic (LUNC). Additionally, all network stablecoins (UST, KRT, EUT) are now referred to as Terra Classic stablecoins (USTC, KRTC, EUTC). The new chain will not feature any Terra stablecoins. There is a prevailing theory that the use of the term “classic” references the Ethereum / Ethereum Classic split in 2017. According to CEO Do Kwon, the collapse of UST in the spring of 2022 is comparable to Ethereum’s DAO hack incident in 2017.

Luna Classic (LUNC) is the initial native token of the Terra blockchain, launched in August 2018. LUNC was present prior to the introduction of the new chain—currently known as Terra (LUNA)—and operates using the original codebase of the Terra ecosystem. The primary function performed by this native token was to mitigate price fluctuations of the algorithmic stablecoin, UST. The UST stablecoin was pegged to the US dollar by minting and burning UST tokens to stabilize the coin's supply and demand. In May 2022, UST lost its peg and collapsed. The algorithm governing the UST stablecoin generated trillions of LUNA tokens, leading to a hyperinflationary spiral, which decreased the value of the original LUNA token by 99%. Read: The full breakdown of the Terra Crash What distinguishes Terra (LUNA) from Terra Classic (LUNC)? Both iterations of the token are valid due to the execution of a proposal titled Terra Ecosystem Revival Plan 2. The core of this plan involves splitting the current blockchain through a fork, which established a new chain within the ecosystem while retaining the previous version. As per the recovery plan, the existing chain and token have been rebranded as Terra Classic. New LUNA tokens were distributed through an airdrop to pre-existing holders of LUNA and UST prior to the depeg and subsequent crash.

Terra was established in January 2018 by Daniel Shin and Do Kwon. They envisioned the project as a means to accelerate the adoption of blockchain technology and cryptocurrency, with an emphasis on price stability and usability. Kwon assumed the role of CEO of Terraform Labs, the company responsible for Terra. Before developing Terra, Shin co-founded and led Ticket Monster, commonly known as TMON, a prominent South Korean e-commerce platform. He later co-founded Fast Track Asia, a startup incubator that collaborates with entrepreneurs to develop fully operational companies. Kwon had previously founded and served as CEO of Anyfi, a startup offering decentralized wireless mesh networking solutions. Additionally, he has worked as a software engineer for Microsoft and Apple.

Terra distinguishes itself through its use of fiat-pegged stablecoins, claiming to combine the borderless advantages of cryptocurrencies with the everyday price stability of fiat currencies. It maintains its one-to-one peg via an algorithm that automatically adjusts the stablecoin supply based on demand. This is achieved by incentivizing LUNA holders to exchange LUNA and stablecoins at profitable rates, as needed, to either expand or contract the stablecoin supply to match market demand. Terra has formed several partnerships with payment platforms, notably in the Asia-Pacific region. In July 2019, Terra announced a partnership with Chai, a mobile payments application based in South Korea, through which purchases made on e-commerce platforms are processed via the Terra blockchain network. Each transaction incurs, on average, a 2%–3% fee charged to the merchant. Moreover, Terra is bolstered by the Terra Alliance, a consortium of businesses and platforms advocating for the adoption of Terra. In February 2019, the company disclosed that e-commerce platforms from 10 different countries, representing a user base of 45 million and a gross merchandise value of $25 billion, were members of the alliance.

As of August 2022, the total supply of Terra Classic (LUNC) is 6.9 trillion, with 6.5 trillion LUNC in circulation.

The Terra blockchain utilizes a proof-of-stake consensus algorithm based on Tendermint, in which LUNA token holders stake their tokens as collateral to validate transactions, receiving rewards proportional to the amount of LUNA staked. Token holders also have the option to delegate others to validate transactions on their behalf, sharing in any resulting revenue. Terra provides additional guidance to validator nodes on best practices to help secure the network. In May 2019, shortly after Terra's mainnet launch, CertiK, a blockchain verification and penetration testing firm, completed a security audit of the network. This audit examined its economic model to protect against market manipulation, its architecture, and its coding language. CertiK found that the "modeling and mathematical reasoning" of the Terra network were "considered sound," but did not comment on the blockchain's performance.

Most cryptocurrency exchanges have historically supported Terra Luna and continue to support Terra Classic (LUNC) today. Luna Classic is accessible on major platforms, such as Binance, KuCoin, Kraken, Huobi Global, PancakeSwap (V2), MEXC, and Gate.io. Interested in monitoring LUNC in real-time? Download the Eulerpool mobile app. Explore our crypto glossary.

The LUNA token and UST are interdependent, given that the Terra ecosystem's success hinges on the adoption of UST as a stablecoin. LUNA supports UST and is burned when the demand for UST increases. With upgrades such as Columbus-5, the supply of LUNA may become significantly deflationary over time. Conversely, the value of LUNA can decline if UST is perceived as unstable. UST temporarily lost its peg following the Wormhole hack, resulting in a short-lived price crash for LUNA. In May 2022, a series of liquidations and bank runs occurred as investors withdrew their funds, causing UST Classic to depeg to a low of $0.044. LUNA Classic plummeted over 99% from more than $80. UST Classic has not regained its peg.