In the context of the blockchain industry and cryptocurrency markets boom, every day more and more kinds of stablecoin are appearing with certain roles. The typical example is Terra USD (UST) – a stablecoin that has the ability to be scalable and profitable. And now, we will get to know about this stablecoin.
Overview
Terra USD (UST) appeared as a stablecoin that intends to benefit users and the community at large. So what is Terra? and what is UST?
What is Terra?
Terra is a blockchain of Terraform Laps – a subsidiary of the Terra Alliance consisting of 16 e-commerce companies spread across East Asia. The purpose of this platform is to provide stablecoin to bring stability when conducting cross-border payments. By using stablecoin, Terra’s crypto ecosystem can provide a low transaction charge, quick payment, and boost retail trading.
Alt: What is Terra?
What is Terra USD?
TerraUSD (UST) is a decentralized, infinitely scalable, and highly profitable stablecoin. TerraUSD is also known as an Algorithmic stablecoin. TerraUSD is released at the end of 2020. Because this stablecoin influences the growth of LUNA, the Terraform Labs team has focused on increasing connectivity with other blockchains through the bridge method.
Alt: UST
Established team
Terra (LUNA) was founded by Kwon and Daniel Shin in April 2019. In September 2020, they launched TerraUSD on Bittrex Global. Since that day, TerraUSD has far outstripped many stablecoin competitors, such as GUSD (Gemini) and PAX (Paxos). Terra is TerraUSD’s private blockchain, which is the creation of Terraform Labs (a subsidiary of Terra Alliance).
Do Kwon is the CEO of Terraform Labs, a former software engineer at Microsoft and Apple. He also served as the CEO of Anyfi, a start-up providing decentralized solutions for wireless networks. Kwon is on the Forbes 30 Under 30 list, the most successful entrepreneurs in the world.
Co-founder Daniel Shin is a talented economist and entrepreneur. Prior to Terra Alliance, he co-founded Fast Track Asia, an incubator startup, and co-founded TMON (Ticket Monster), a Korean e-commerce platform.
Alt: Founder
Operating mechanism
This stablecoin does not have a direct 1:1 ratio to USD. As an Algorithmic Stablecoin, TerraUST will use the LUNA coin as a method of stabilizing the algorithm. Any user can receive UST at 1:1 when burning their LUNA. In contrast, they can also burn UST to receive LUNA. This mechanism helps to make both coins more linked and promotes the development of LUNA.
To mint 1 TerraUSD, users only need to burn an amount of LUNA worth 1 USD. That is, the more USTs minted, the more LUNAs will be burned. With a monetary policy that can expand infinitely, TerraUSD can help Defi applications and protocols reach their full potential without restrictions.
Where to buy Terra USD
You can use a debit card, credit card, or PayPal to buy Terra USD. But, the transaction won’t be direct. So you need to use a debit card or credit card to buy Ethereum or Bitcoin first. When you get Ethereum or Bitcoin, you can convert it to Terra USD. You know, it takes several stages and processes.
So there are 2 step as the following:
Step 1: You go to the online exchange and buy Ethereum or Bitcoin. You can buy it at Coinbase.
Step 2: Find a crypto exchange that supports TerraUSD currency and convert Ethereum or Bitcoin to UST.
Step 3: Store your UST to a secured wallet
Or you can buy UST in big exchanges: KuCoin, Uniswap (v2.0), Terraswap,…
Alt: Buy at Coinbase
Some Terra USD features
Let’s get to know some functions of UST.
Scalability, yield-bearing, and interchain capabilities
Terra uses a few simple protocols and policies to achieve TerraUSD’s essential features. They include scalability, yield-bearing, and interchain capabilities. TerraUSD takes advantage of pre-existing technology and innovations to provide users with the best experience.
Terra USD is an algorithmic stablecoin
Which means the cost of minting is equal to the face value of the minted stablecoins. It uses LUNA, Terra’s native cryptocurrency, as a reserve asset. In other words, if you want to mint one TerraUSD, only $1 worth of Terra’s LUNA token is burned out of the system.
Make profits
The stablecoin can earn stable yield using the “Anchor” yield service, an unheard-of development among stablecoins. TerraUSD also allows the linking and enabling of blockchain ecosystems, using a bridging protocol known as Dropship. Dropship allows integration of TerraUSD into Defi platforms and DEXs as well as its moving between blockchains.
Another vital technology supporting interest yielding with UST is the Anchor protocol, a lending and saving protocol that promises a 20% return on savings made in UST. In contrast, MakerDAO’s DAI has a 12% return, and Coinbase’s USDC has a 14% return. Anchor also allows users to borrow up to half of their staked LUNA. Collateral for loans will be in the bonded LUNA token (bLuna), a staked version of LUNA that earns returns. However, Terra plans to allow native cryptocurrency from other Layer0 chains to act as collateral.
Expansion capability
This protocol helps preserve scalability. Furthermore, it guarantees the stable value of UST since LUNA’s demand and supplies determine the value of TerraUSD. It runs on a Proof-of-Stake (PoS) system where miners must stake the native Terra’s LUNA token to mine Terra transactions.
