CoinEx Institution | Could Terra, An Empire of Crypto Finance, Be the Next Dark Horse in the Field of Public Chains?

Source: Defiyield

The working mechanism of stablecoins in the Terra ecosystem

Terra is a public chain focusing on commercial applications. As such, its ecosystem uses a dual-token design of LUNA+UST. The former is used for governance, staking, and node validation on Terra, while the latter is a USD-pegged stablecoin native to the public chain. Both LUNA and UST can be used as gas fees for on-chain transactions. Terra thinks of stablecoins as the backbone of DeFi that are essential to blockchains. When going into a new public chain, users prefer to use stablecoins to minimize the risk of unstable native assets.

Source: https://research.thetie.io/the-terra-triforce-rise-of-the-LUNAtics/

Backed by an outstanding founding team and strong business resources, Terra has built a well-rounded on-chain + off-chain ecosystem

Terra owes its birth to two individuals — Do Kwon and Daniel Shin.

The risks and challenges facing Terra

Many have questioned whether algorithmic stablecoins are really “stable”? In fact, Terra has also suffered a death spiral. On May 19, 2021, the BTC price fell by 30%, and LUNA also plummeted to $4.1, a 75% drop compared with the figure in the previous week. As investors lost faith in LUNA, demand for UST also shrunk.

Conclusion

In the stablecoin category, Terra, as it stands today, has achieved the victory in the current stage. However, there is still a long way to go before it can claim itself as the leader of stablecoins. Meanwhile, the top priority for Terra is to seize the opportunity of the growing market demand for public chains and introduce and build a more diversified DeFi ecosystem by providing incentives. Backed by an outstanding founding team and strong business resources in South Korea, the public chain will keep expanding its on-chain ecosystem, as well as off-chain payment channels. We believe that Terra is a promising project just like Solona.

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