Terra (LUNA) is the price-stable cryptocurrency which focuses on powering the next-generation of payment network to help grow the real GDP of the Blockchain economy. Terra powers the innovation of money.
The mission of Terra (LUNA) is to free people from the hidden fees which are embedded in everyday payments. The power of blockchain technology is used to harness the inefficiencies of this system.
Terra payments upgrade the traditional payment system with a single efficient blockchain system. It facilitates lower transaction fees, instant settlement, and ongoing discounts.
A network of Stable coins powers Terra(LUNA). The stable coins are price-stable digital currencies, which are pegged to the major currencies of the world. The Terra Protocol is programmed to ensure price-stability using the algorithm, which expands and contracts the overall money supply.
Terra Pressure to Normalize Price
Sydney Ifergan, the crypto expert, tweeted: “The Terra Network is backed by Asia’s top retail platforms. Luna represents the mining power in the Terra Network. Miners absorb volatility.”
When it comes to determining the true exchange rate for Terra, “For any Terra sub-currency in the set of currencies C = TerraKRW, TerraUSD, TerraSDR…miners submit a vote for what they believe to be the current exchange rate in the target fiat asset.” The vote is further tallied, considering the weighted medians in true rates.
Some amount of Terra (LUNA) is further rewarded to those who have voted within the “1 standard deviation of the elected median.”
The oracle facilitating calculations also provides for “adding and deprecating Terra currencies.” When enough numbers of votes are not received for the Terra Currency, the deprecation is triggered.
When it is seen that the price of Terra (LUNA) is deviating from the pegged currency, pressure should be applied to normalize the price. A lot happens in terms of contracting the money supply and expanding the money supply. The Terra miners absorb the contraction costs by mining power dilution. When the target supply is reached, the miners are compensated with increasing mining rewards.
Terra Transaction Fees and Seigniorage
The network of stable coins in Terra (LUNA) is backed by Luna, the staking token, which powers Terra’s Delegated Proof-of-Stakes. Luna is named as the eternal guardians of stability. For providing stability and security, Luna stakers get their rewards from the transaction fees and seigniorage.
Seigniorage is the difference between the value of money and the cost it takes to produce and distribute it.
Chai is a payment gateway on Terra blockchain, which provides merchants and users with lower fees and more significant benefits.