The whole essence of blockchain technology and decentralization began when Bitcoin got launched in 2009, and it was presented as the first flagship cryptocurrency out there. After 10 plus years, it is gladly stated here that the crypto market is not only confined to the idea of cryptocurrencies as many other products and services have been introduced, such as non-fungible tokens, decentralized apps, metaverse as well as stablecoins.
The prospect of stablecoins is extremely interesting yet, at the same time, very significant; these work and behave just like a normal cryptocurrency but are indeed centralized, which means that a centralized governing body has control over its distribution, supply, and the management of price as well. But in terms of security and whatnot, a stablecoin is identical to a cryptocurrency, thus enjoying the best of both worlds.
Today we will be talking about one such stablecoin generator by the name of Terra, which happens to be a blockchain network that was developed using the Cosmos SDK; the proper use case for this blockchain network is the creation of stablecoins. It doesn’t rely on any third-party stablecoin or cryptocurrency having its value consigned to specific crypto but uses its own native token by the name of LUNA.
LUNA can be used by the user for the sake of paying network fees, staking their token for the sake of earning handsome awards as made available by the network, along with the participation aspects of the user in multiple governance-oriented tasks and elements. This native token can also be used to earn some profit from stablecoins because you can stake it into those mining pools as well, which are outside the realm of the crypto market.
Terra has helped in the reduction of volatility when it comes to stablecoins and has made LUNA available as a native token for validators and delegators to stake it into a dedicated investment pool for the sake of earning rewards and whatnot. Both Terra and LUNA play an important role when it comes to securing the network and when using the transactions in real-time without letting the data or the authenticity of the process slip from one slide to the other edge.
If you are interested in the prospect of making some money, then you can definitely purchase LUNA from the Binance crypto exchange and store it in your own wallet. This crypto will allow you to participate in the governance-oriented aspects of the Terra network, or you can stake it for the sake of earning handsome rewards; all of that can be done via the official dashboard of the Terra blockchain network.
How is Terra Changing the Stablecoin Game?
If you are into stablecoins you are going to enjoy the prospect of the Terra network and the idea of developing your own stablecoins from scratch. There are a lot of options to choose from, and based on your interest or preference, you could get to pick one and invest your money into it. You can get into a variety of stablecoins, some of them which are backed only by fiat crunchies whereas some are hybrid which means that their value is pegged not only into Fiat alternatives but into some cryptocurrencies as well.
You can play with the overall idea of how the value of a stablecoin must or must not change or in what specific gradient should it be. With Terra network, you would be able to do all of that and more, providing you access to the developer tools, which were only a myth back in the day to create your own stablecoins and to have their value pegged into specific cryptocurrencies or Fiat alternatives of your choice.
How Does it Work?
With all those statements made earlier and the idea of developing your own stablecoin and having its value pegged to a myriad of Fiat currencies as well as crypto alternatives, you might be wondering how does Terra blockchain works? With the help of the Terra network, you can develop your own stablecoins and have them pegged to different Fiat currencies. All these coins utilize the Seigniorage mechanism of the Terra network, which brings into account the use of the tendermint delegated proof of stake consensus algorithm.
You also get to have smart contract ability for the sake of creating multiple stablecoins covering specific arrays of fiat and cryptocurrencies out there. The project might not be a hit yet in Europe or in North America, but in Asian markets, it has proven to be a delight because of the fact that e-commerce enjoys a wide user base in countries such as South Korea. Multiple Asian countries have enabled people to utilize stablecoins because of the fact that most of them have their value pegged into a Fiat currency; therefore government or the state of that specific country will allow the use of such stablecoins rather than allowing people to have any kind of interaction with cryptocurrencies because of their volatile nature.
It means that you can utilize stablecoins as if these were the local currencies without any harm or sanctions from the government. Some of these tokens that you can develop with the Terra network are hybrid, as stated earlier, which means that these have their value pegged into not only the Fiat currencies but as well as some of the cryptocurrencies. It allows you to have the best of both worlds, which means that if the Fiat currencies are dipping, then the crypto will cover the damage, and if the crypto is succumbing to its volatile nature, then the Fiat currencies would come to your aid.
It is a known fact that no one just out of the blue can start a cryptocurrency or claim to have launched one. There is a proper channel that needs to be followed; otherwise, the whole process is thrown away. First of all, if you wish to launch a cryptocurrency, you must obtain either an IPO or an ICO, which loosely translates into initial public offering or initial coin offering; these are two distinct methods used to this date for the sake of developing new cryptocurrencies.
The reason behind sticking with this process is that you require tons of money to launch a cryptocurrency and to take care of the extensive paperwork involved. No one has this type of capital at hand, which is why they are forced to approach a public offering or coin offering alternative, which means that people would be given the permission to invest in the said crypto project even before it gets launched.
So what do you do here is that you complete all the paperwork related to your cryptocurrency, the type of infrastructure it might have, it’s internal working, and the purpose behind its creation must also be documented because the first thing that investors are going to explore about your project and see is your white paper which contains all the information for your particular preference. Make sure that the paper itself is comprehensive, detailed, and answers multiple questions of the reader that might jump into their minds related to your cryptocurrency.
Due to the exhaustiveness that this whole process might cause, people prefer launching stablecoins because there are fewer regulations involved, and the process is much more streamlined. But then again, the cost factor is somewhat impossible for a single person to cover, and even if you are willing to cut some corners, you would not be able to cut your budget when it comes to development, coding, and other technicalities involved for the project.
This is the reason why stablecoins enjoy a much more serious crowd than cryptocurrencies, and Terra has made the whole thing pretty straightforward and way easier. All you have to do is to sign up over the Terra network and propose a stablecoin project that you are interested in. You would then be tasked with uploading multiple elements for the team to verify and authenticate for yourself to see if the project itself is plausible because if it is not, then the team would suggest multiple changes that need to be made for you moving forward with this project of yours.
When the initial draft of the project is ready now, the development work starts; you don’t have to hire a developer or a team to do so because all the resources that you are ever going to require are already available on the Terra network. You just have to approach the right section, and there you can have all the help you require with your stablecoin project. You can choose the factors which are going to influence the value of this particular token in the future, such as to whom its value should be pegged, should it be the fiat crunchies or cryptocurrencies?
You can choose either one, or you can go with a hybrid approach which allows you to have the best of both worlds for your stablecoin project. Now that you have taken care of everything and the development is completed, the Terra network will undergo multiple testing for your stablecoin to make sure that each and everything is in order because the last thing that Terra network wants is to ship you a broken stable point project and to hurt your credibility as well as the authenticity of the product that you are offering out there in the crypto market.
Only after successful testing is completed and the results are promising and show no signs of error or any other technical discrepancy only then your stablecoin would be approved for active trading on the Terra network. Remember that if your stable token has been verified only once by the network, then it doesn’t mean that the token would remain exceptionally functional and secure throughout its itinerary because Terra network takes the security of each and every proceeding done on its blockchain rather seriously which means that your stablecoin will be tested multiple times before and after its launch to ensure that experience of the user is impeccable and without any technical difficulties.
After your stablecoin has been launched and is now available for active trading, you will be given complete control of the stablecoin in question. It means that you would be able to change the cryptocurrency or Fiat currency to which the value of the token is pegged while at the same time changing its status from fiat to crypto, crypto to fiat, or choosing a hybrid approach according to your own preference and metrics that you want to abide by.
On the other hand, if you don’t want anything to do with the creation of stablecoins using the Terra blockchain, then you should get yourself interested in the prospect of its native token, which is LUNA. You can stake the token within the network to get access to the governance-oriented votes and aspects of the network or earn handsome rewards for the time being; your token is subjected to a dedicated mining pool. If you are interested in doing only that, then you would find all the relevant details about this process below.
What is LUNA?
As explained earlier, LUNA is the native token of the Terra network, and it can be acquired from any other reputable crypto exchange out there. The process is really simple, you go and visit the crypto exchange you trust for the sake of purchasing the token. You create a free account where you have to provide some personal information so that the exchange can verify your details, and once everything is up to the order, you would be tasked with putting down your financial credentials, it can be anything such as a debit or credit card, your bank account or any other method that you prefer for the sake of paying for your purchases on the crypto exchange.
Once all of this is done, and your account is ready, you can just hover over to the present cryptocurrencies that the crypto exchange is offering and search LUNA there. You would probably find it without any problem, but if you do have some issues trying to track down this particular cryptocurrency, you can always reach out to the customer support of the crypto exchange where you are conducting business.
Once you select LUNA, you will have to choose a number of tokens that you want to buy; once you choose the appropriate number, you will be redirected toward the checkout counter. Here an exchange rate will be applied to your purchase; depending on the type of payment you selected and the number of tokens that you are willing to buy, an appropriate rate will show on your screen pertaining to the total amount that you owe to the crypto exchange.
The next thing is that you clear the amount by clicking the pay now, and once the transaction is verified, you will receive your stable tokens into a wallet address that you submitted during the purchase process. LUNA can be used for different roles over the Terra blockchain network. The most appropriate one is that you can pay for transaction fees and other services that you have availed from the network using the LUNA token; it works as a utility token that way allowing you to pay your differences through the token itself.
The next thing that you can do with the LUNA token is to take part in the governance-oriented aspects of the platform. For that to happen, you would have to stake your LUNA tokens, and then you would be able to vote your opinion on certain proposals and recommend changes which would reflect in the final outcome of a particular decision related to governance over the Terra blockchain. You would also be able to maintain the price of certain stablecoins by submitting your tokens into a mechanism that can absorb demand fluctuations for these stablecoins that are being minted over the Terra blockchain.
You can also stake your LUNA tokens for the sake of earning handsome rewards from the network itself; for that to happen, you would have to select a validator, and you would have to become a delegator so that your tokens could be staked for that particular validator to validate transactions on your behalf. You break down the total income which the person generates, and after paying that person their cut, you get to keep the difference which is pretty awesome without having to do any particular thing other than staking your LUNA tokens.
If you see, then you would be able to understand just how to further the whole concept of decentralization and blockchain technology has come, the limitations are lifted, and the opportunities are limitless. As someone who is present in this bustling age of blockchain technology, you would definitely want to take advantage of the services and products that are present now rather than repenting over at a different time in the future, knowing that you could have done something with it, but you chose not to.