summary: Terra is a Decentralized system focused on enhancing the DeFi space through programmable payments in order to drive adoption.
content: Terra is a Decentralized system focused on enhancing the DeFi (Decentralized Finance) space through programmable payments in order to drive adoption. The Protocol has a native Token, LUNA, and is backed by a host of fiat-pegged Stablecoin. By employing Stablecoin, Terra presents a payment infrastructure void of the shortcomings of traditional payment methods such as Credit card and old Blockchain-based payment systems. Although payments are Terra’s key contribution, it’s also built around providing a transparent ecosystem which includes logistics. As of December 2020, the network has transacted an estimated $299 billion for over 2 million users. Company The company behind Terra, TMON (Ticket Monster) is one of the 10 largest E-commerce companies in Korea, with a company value of up to $ 3.5 billion. Daniel Shin founded TMON and also founded Terra. Ticket Monster Inc. was founded in 2010 by Daniel Shin and is one of the leading E-commerce companies in Korea today. In 2014, 70% of Ticket Monster's transactions were completed on mobile devices and its customer base continued to expand to many different age segments. The company operates in three main verticals - Commodities, Localities and Tourism - and offers more than 47,000 SKUs (Stock Keeping Unit) through partnerships with about 15,000 sellers. Overview Terra is a Blockchain protocol that supports stable programmable payments and open financial infrastructure development. It is supported by a basket of fiat-pegged, Seigniorage share style Stablecoin which are algorithmically stabilized by its native Cryptoassets, Luna. Terra is both price-stable and growth-driven. It achieves price-stability via an elastic money supply, enabled by stable mining Incentive. It also uses Seigniorage created by its minting operations as transaction stimulus, thereby facilitating adoption. One part of Terra's value contributions, payments, in essence replaces the complicated payments value chain, including credit card networks, banks, and payment gateways with a single Blockchain layer. In concert with the efficiencies that Terra has provided payment channels for both merchants and consumers, it continues to steadily provide infrastructural improvements and tools for the foundations of laying down a credibly neutral, distributed, and radically transparent ecosystem. A price-stable Cryptocurrency designed for mass adoption. We are building financial infrastructure for the next generation of Decentralized application (DApp). Bolstered through the initial mass adoption of Terra's Blockchain infrastructure powering its partner, CHAI, which has amassed over 1.3 million users to date, Terra moves naturally towards ecosystem building that offers competitive programmable payments, Logistics, and infrastructure to power the plethora of industry that will be built on efficiency and scale. Luna : Terra Protocol’s Native Currency Luna is the native staking Token recognized by the Terra protocol. Through its role in collateralizing the mechanisms that secure the price-stability of Terra Stablecoin and modulate the Incentive of Validator, Luna serves as a foundational asset for the entire Terra network and ecosystem. Luna is used to, among other things, to provide collateral for the purpose of stabilizing the price of Terra-based Stablecoin. Luna has a total supply of 994,871,354 Token, with 25 percent of it already staked. The token is listed on leading Cryptocurrency exchanges such as Binance and Huobi. Luna being the reserve Currency of the Terra platform, has three core functions: i) mine Terra transactions through staking, ii) ensure the price stability of Terra Stablecoin and iii) provide Incentive for the platform’s Blockchain validators. The Terra protocol runs on a Proof-of-stake (PoS) Blockchain, whereby miners must stake their Luna in order to mine transactions. All else being equal, a Validator who has staked more Luna has a higher chance of generating the next Terra block compared to another Validator who has staked less. In essence, Luna represents a validator’s mining power. Token Distribution: 40% - for Terra Alliance partners, ecosystems and first strategic investors; 20% - reserved for stable reserve fund 20% - reserved for team members 20% - for both Private-Sale investors and Public-Sale Funding: Terra has raised a total of $32M in funding over 11 rounds. Their latest funding was raised on Aug 23, 2019 from a Corporate round. Other Luna Use Cases Paying for gas: Transactions on the Terra protocol incur gas fees. The fees are meant to prevent malicious actors from spamming the network. Furthermore, validators determine Terra’s minimum gas fees. With each new block added to the chain, validators earn a compute fee in regards to their stake muscle. Paying for Usability fee: Also referred to as taxes on the platform, the usability fee is charged on every transaction at a rate between 0.1 and 1.0 percent. Taxes are payable in Luna or any other Currency on the network. Moreover, its circulation is based on a validator’s stake. Staking Rewards: Terra supports staking and allows Luna holders to Delegate their coins to help in securing the platform. Apart from paying staking rewards in Luna, the rewards are also meant to Incentive the investor to hold the token for the long term. Staking incentives are deposited with the validators, who then distribute them to delegates after taking their cut. As with most Proof-of-stake (PoS) platforms, the percentage of staking rewards is proportional to the number of coins staked. Incentives from staking are harvested from Seigniorage, gas, and taxes. The annual yield for staking currently stands at 11.17%. With the Luna staking system inspired by the Cosmos network, staked tokens have a 21-day lockup period, Same lockup period as a user who Votes on an Article with the IQ token on Everipedia's Platform. Seigniorage Rewards: Terra runs a Seigniorage pool that is used to pay validators for engaging with oracles and the exchange of Luna. Phases of Luna Terra’s native Token can exist in three dimensions. To generate rewards, new Luna tokens must go the full cycle. The three states are unbonded, bonded, and unbonding. Unbonded: This is Luna that can be freely transacted as a regular Token, with no restrictions. It is free for trading between investors. Bonded: While Luna is bonded, it is considered staked, and generates rewards for the Delegator and Validator it is bonded to. The Luna cannot be freely traded, and is locked in the ecosystem until it is fully unbonded. Unbonding: Luna that is instructed to be undelegated from a delegator transition into an "unbonding" state during which neither rewards accrue nor the Luna can be freely traded. This unbonding phase takes 21 days to complete, after which the Luna return to an unbonded state. Lastly, the unbonding state is for tokens between bonded and unbounded states. Note that the unbonding stage takes 21 days before the Coin can be traded or staked/bonded again. Terra’s key Participants Validator Terra Core is powered by Tendermint consensus, which relies on a set of validators to secure the network. Validators run a full nodes and participate in consensus by broadcasting votes which contain cryptographic signature signed by their private key. Validators commit new blocks in the Blockchain and receive revenue in exchange for their work. They also participate in on-procotol treasury governance by voting on governance proposals. A Validator voting influence is weighted according to their total stake. However, it’s not all rosy for validators. They have to behave as misbehaving results in a penalty that sees the validators’ stake slashed. Key considerations for validators are security and less or no down-times. A validator can also be penalized for signing a block twice and repeatedly not accumulating enough oracle votes. Becoming a Validator: Any participant in the network can signal their intent to become a Validator by creating a Validator and registering its Validator profile. To do so, the candidate broadcasts a create-validator transaction, in which they must submit the following information: Validator's PubKey: Validator operators can have different accounts for validating and holding liquid funds. The PubKey submitted must be associated with the private key with which the Validator intends to sign prevotes and precommits. Validator's Address: terravaloper- address. This is the address used to identify their Validator publicly. The private key associated with this address is used to bond, unbond, and claim rewards. Validator's name (also known as the moniker) Validator's website (optional) Validator's description (optional) Initial commission rate: The commission rate on block provisions, block rewards and fees charged to delegators. Maximum commission: The maximum commission rate which this Validator will be allowed to charge. Commission change rate: The maximum daily increase of the Validator commission. Minimum self-bond amount: Minimum amount of Luna the Validator needs to have bonded at all times. If the validator's self-bonded stake falls below this limit, its entire staking pool will be unbonded. Initial self-bond amount: Initial amount of Luna the Validator wants to self-bond. Once a validator is created and registered, Luna holders can delegate Luna to it, effectively adding stake to its pool. The total stake of a validator is the sum of the Luna self-bonded by the validator's operator and the Luna bonded by external delegators. Only the top 100 validators with the most stake are considered the active