The Terra Crisis
Understanding of Terra Blockchain, pegging mechanisms, its downfall, and next steps.
“95% of the total cryptocurrency market is going to die. It’s also very entertaining to watch those projects die.”
- Do Kwon
What is Terra?
Terra is a Cosmos-SDK based blockchain that utilizes Tendermint Core and was founded by Do Kwon, who also helped create ICON (ICX), one of the largest cryptocurrency projects in South Korea. The Terra team launched their mainnet in March 2019.
Terra aimed to provide a decentralized payments network for cross-border commerce. The Terra Protocol uses a native token, Terra Luna, to collateralize a stable coin called TerraUSD. TerraUSD is pegged to a basket of fiat currencies and backed by Terra Luna.
What is Luna & TerraUSD?
Luna and TerraUSD (UST) are both native tokens of the Terra Blockchain built on Cosmos SDK.
UST is pegged to the US dollar, which means one UST is supposed to always be worth around the same price as one dollar. Luna plays a vital role in keeping this balance.
