BTSE Welcomes Terra (LUNA)

Written by BTSE

October 19, 2021

BTSE Welcomes Terra (LUNA)

BTSE welcomes Terra (LUNA) onto the exchange, as part of its commitment to growing the range of quality digital assets available to traders. LUNA is the reserve token of the Terra protocol, which utilizes an algorithmic stablecoin for digital payments.

BTSE has listed LUNA, the reserve token of the Terra network. Terra’s delegated proof-of-stake (PoS) blockchain is powered by its LUNA token.

Terra is a monetary protocol that maintains the price stability of a basket of stablecoins by increasing or shrinking the LUNA supply dynamically. So miners provide security and stability, and in return, the protocol offers mining benefits, such as revenue obtained from minting coins, or “seigniorage”, and transaction fee discounts regardless of market circumstances.


How Do Terra Stablecoins Keep Their Value Constant?

The Terra ecosystem maintains stable prices by modifying supply in response to demand variations. It exerts pressure to rectify a Terra stablecoin’s departure from its base as soon it is detected.

To do this, the Terra protocol employs supply-and-demand forces. For instance, if the value of one TerraUSD (UST), the stablecoin issued by Terra, exceeds its one-dollar peg, the protocol adjusts by raising the UST supply. It mints and sells some of its stablecoins on the marketplace, and savvy investors can gain from trading the equivalent of one dollar worth of LUNA for one UST. Minting and trading continue until there is enough new UST to restore its peg. 

Similarly, if the value of UST falls below its one-dollar level, the system will reduce its availability. LUNA is then minted and sold to the public, and investors can then swap one UST for the same value in LUNA to keep their gains. In both scenarios, the Terra protocol produces enough LUNA or stablecoin as would be required until each asset’s equilibrium is met.


What Is LUNA?

LUNA, as the Terra network’s reserve token, serves three main purposes: staking to process Terra payments; ensuring stable prices for Terra crypto assets; and providing monetary benefits to blockchain verifiers on the platform.

The Terra protocol is on a PoS blockchain which means that to process payments, miners have to stake their LUNA tokens. In the absence of other factors, a verifier who has committed more in LUNA has a better chance of producing the next Terra block than one who has invested less. This grants more mining power to the users who stake more LUNA as validators to ensure network security; but they are also more exposed to the asset’s market volatility. 

LUNA token, priced at $35.90 on October 19, has a market cap of more than $14 billion and 0.56% market cap dominance, according to CoinGecko. Its circulating supply is around 401 million tokens out of a maximum of one billion.


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Note: BTSE Blog contents are intended solely to provide varying insights and perspectives. Unless otherwise noted, they do not represent the views of BTSE and should in no way be treated as investment advice. Markets are volatile, and trading brings rewards and risks. Trade with caution.

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