Terra is a price stable and democratic currency protocol that represents a very special class of staboins -- algorithmic staboins. The value of a stablecoin does not depend on collateral, but is based on mathematical algorithms. Terra stabilizes prices by automatically increasing or tightening the money supply through smart contracts that use dual tokens, including the stablecoin TerraUSD (UST) and the governance token Luna. The core of UST algorithm stability mechanism lies in smoothing short-term fluctuation through medium - and long-term benefits of the system. LUNA and UST can cast and destroy each other at the price quoted by the predictor. This dual Token design can provide negative feedback force to the system at ordinary times to maintain the stability of stablecoin UST. KuCoin is UST's largest trading market, which provides UST with better liquidity.

Terra's ecological layout, first through the payment application Chai, enables UST to be used for payment and consumption in the offline real world, rapidly narrowing the distance between the crypto world and the traditional world, and also constructs the primary usage scenario for UST based on the payment needs of the real world. Making UST more than just a stablecoin in the crypto world, but a real payment method. At the same time, traditional financial assets are synthesized to the chain through Mirror to set up the investment usage scenario on the chain for UST, and then assist Anchor to earn 20% of stable currency income to set up the savings usage scenario on the chain, so that the basic demand pattern of UST can be determined.

The founders of AMM Osmosis in Cosmos Ecology say that once Terra (Stabecoin project in Cosmos) starts cross-chain communication (IBC) in October 2021, the whole Cosmos ecology will change, Staboin UST (Terra's dollar-anchored staboin) will enter the Cosmos ecosystem, and Terra is expected to become the most popular underlying trading pair in Osmosis.

Terra is a price stable and democratic currency protocol that represents a very special class of staboins -- algorithmic staboins. The value of a stablecoin does not depend on collateral, but is based on mathematical algorithms. Terra stabilizes prices by automatically increasing or tightening the money supply through smart contracts that use dual tokens, including the stablecoin TerraUSD (UST) and the governance token Luna. The core of UST algorithm stability mechanism lies in smoothing short-term fluctuation through medium - and long-term benefits of the system. LUNA and UST can cast and destroy each other at the price quoted by the predictor. This dual Token design can provide negative feedback force to the system at ordinary times to maintain the stability of stablecoin UST. KuCoin is UST's largest trading market, which provides UST with better liquidity.

Each time a UST transaction is higher than the hook, the user can send $1 worth of LUNA to the system and receive a UST. Conversely, when UST trades below the hook, a user can send a $1 UST to the system in order to get $1 LUNA. In both cases, users were incentivized to arbitrage, helping to maintain the UST peg to the dollar. Mirror Finance and Anchor Protocol, two of Terra's official (Terraform Lab funded and launched) on-chain eco-hit products, and Chia, a payment application that supports the actual demand of payment scenarios under the chain. Among them, the payment program Chai has experienced more than two years of development test in the offline payment scene in South Korea, with stable growth according to data. Mirror Finance, a synthetic asset protocol, has become the industry's largest trading platform for synthetic U.S. stocks. Anchor Protocol, as a fixed interest rate Protocol, introduced bETH in August and ushered in significant growth in lock-up ecology and volume. In general, Mirror Finance and Anchor Protocol, two flagship products, play an almost central role in Terra's on-chain ecosystem. In addition, the coverage of off-chain payment scenarios of Chai has captured a large number of novice users who want to try to access the crypto world from the three aspects of payment, investment and savings.

The core of UST algorithm stability mechanism lies in smoothing short-term fluctuation through medium - and long-term benefits of the system. Stabocoin UST adopts dual token design, LUNA is the system token, after the stake, the whole network fee can be captured, and UST is the STABocoin of US dollar. LUNA and UST can cast and destroy each other at the price quoted by the predictor. This dual Token design can provide negative feedback force to the system at ordinary times to maintain the stability of stablecoin UST.

By linking to the SDR, TerraSDT can "exhibit the lowest volatility against any fiat currency". As a result, TerraSDT is a prime candidate for Terra's flagship currency, as it can be reliably used to account for transaction fees and mining incentives. Interestingly, Terra uses similar principles to the SDR to stabilise its currency. Terra staboins have shared liquidity, which means that users can make atomic swaps between currencies at their respective exchange rates. When demand for a currency suddenly drops, such mechanisms help to cushion demand shocks.

1. Terra Stable currency relies on the seigniorage model of two tokens. In the seigniorage model, prices are stabilized by controlling the supply of tokens in circulation. The supply increases when the contemporary currency price is above the peg, and conversely, when it trades below the peg, the supply decreases (removes from circulation). However, increasing/decreasing supply can lead to more volatility in the price of the stablecoin itself -- which is where LUNA comes in. LUNA acts as a volatility absorber because it can always mint tokens at a fixed exchange rate, regardless of market conditions. The system provides arbitrage opportunities whenever the Terra stabocoin is unpegged; Arbitrageurs are therefore incentivised to ensure that prices return to their peg. This is further complemented by LUNA's destruction mechanism -- a portion of LUNA is destroyed during the extension and algorithmic tweaked until UST is restored to $1. In other words, the price volatility of The Terra stablecoin effectively shifted to the volatile supply of LUNA. Verification node/client Verification node is a full node operator that maintains the network by storing copies of the blockchain on its system and producing new blocks on the chain. In return, verification nodes receive the following incentives: Gas stabilization fee seigniorage All in all, these incentives add up to an annualized return of approximately 10-15%. This includes airdrop rewards for LUNA pledges for existing agreements (such as Anchor and Mirror) and upcoming agreements (not mentioned above, as these are provisional rewards). However, to be an "active validator" on Terra's blockchain, a "sufficient" amount of LUNA must be mortgaged on the platform. "Enough" is relative, because only the top 100 validation nodes with the highest LUNA pledge will become active validation nodes. As of June 1, 2021, the 100th verified node is "Filpside" with 500,217 LUNA pledged. In return, trusters are LUNA holders who entrust their LUNA to verifiers, who "borrow" these LUNA tokens for a "fee" and pledge them in exchange for more mining capacity. The fee is essentially a mortgage bonus for LUNA holders, a percentage of the mining bonus the verifier gets. Principals are free to choose any node verifier they wish, and verifiers are free to set their own fee rate. Once a person has delegated their LUNA to a verifier, they will immediately start accumulating rewards. However, suppose the client unbinds its LUNA. In that case, there's a 21-day lock-up period, they can't withdraw their LUNA, and they won't get any pledge rewards (the same rules apply to verifiers). The exception is if they re-delegate their LUNA to another verifier; In this case, there is no penalty. 3. Governance Anyone who pledges LUNA can participate in Terra's governance process by voting. Voting rights are proportional to LUNA's pledges. While there is no minimum LUNA requirement for voting, there is a minimum requirement for governance proposals. The proposal process consists of three (3) stages, namely deposit -> vote -> pass or reject. Before proposing, the proposer (or any other LUNA holder) must deposit at least 512 LUNA to move it to the voting stage. If the proposal reaches consensus, the deposit will be returned (whether it passes or fails). But a "no" majority would burn the entire LUNA deposit.

Terra is like an automated traditional bank, facilitating payments, transfers, investments, loans, and savings. It is implemented as a public chain, owned and managed by the community, accessible to anyone in the world with an Internet connection. Users enter the ecosystem via Terra Staboin and access the banking functions through a suite of applications and protocols. Terra has improved the existing banking model with global accessibility and rent-free. One of the most interesting aspects of Terra's ecosystem is the coupling between protocols. Mirror is a protocol built on Terra that allows users to trade mAssets. MAssets are created through a coin minting process that any user can achieve by depositing a minimum of 150% collateral. Trading of coinage assets on Mirror is done through AMMs or a liquidity pool of coinage assets paired with UST. The price of mAssets is soft linked to their real-world counterparts through arbitrageurs and liquidation rewards. Traders who are long certain stocks buy and hold mAssets, and minting mAssets is actually shorting mAssets. Anchor is the second major deal launched on Terra, and perhaps the most disruptive. Anchor takes the borrower's collateral as pledge and provides the lender with a fixed 20% annual return of UST deposit. By pledging major PoS networks, Anchor can maintain stable income generating cash flow for depositors. Terra has plans for the future, including the release of Nebula ETF Protocol to further aggregate the returns of various composites and assets, a more powerful UI experience for users (Kash), and integration with large corporations and onramps (Local Terra), a fiat to cryptocurrency initiative. ETF will increase the demand for synthetic assets and make synthetic assets more stable. Kash brings more users into the Crypto world on the front end, and as the ecosystem evolves, it's possible to work with institutional customers in Onramp to further expand the ecosystem. The integration of these financial services lowers the threshold for ordinary users to obtain services. In addition, for the internal agreement, it also increases the currency demand of UST and enhances LUNA's value capture capability. These diverse users and participants make the market deeper and the system more stable.

Terra is similar to an automated traditional bank, facilitating payments, transfers, investments, loans, and savings. It is implemented as a public chain, owned and managed by the community, accessible to anyone in the world with an Internet connection. Users enter the ecosystem via Terra Staboin and access the banking functions through a suite of applications and protocols. Terra has improved the existing banking model with global accessibility and rent-free.

USDT, the biggest competitor, and all stablecoin currencies.

From the point of view of investment, the trend is very good, bringing us a lot of income, but the project is still in a certain risk. There should be a tipping point at which LUNA's market cap is close to, or even less than, TerraUSD's. When this happens, TerraUSD's reserve assets will be less than its market value, and a run will occur. In addition, under the crazy run, no matter how much LUNA is issued, it will not help. On the contrary, the value of LUNA will fall more rapidly, so that LUNA and TerraUSD may quickly go to zero together. The concept is analogous to the Schwarzschild radius in physics, where nothing can stop a body from collapsing into a black hole if its radius is smaller than the Schwarzschild radius.

We need to look at this project from multiple perspectives. It is impossible for us to understand all the aspects of team operation, incentive mechanism and underlying logic. If we pay attention to it, we will have something to look forward to. I can score 6.5 for this item.

On the risk side of things, the biggest argument has been the risk of USDT, saying that it does not have enough collateral to support the current market value, if there is a run or uncontrollable things out, can not pay the equivalent cash to the holder one for one, then it will directly go to zero, because there is no trust base. Of course, this is an extreme case. It is hard to say whether it will happen or not, and we hope it will not. We will make up for this defect through continuous supervision and improvement. There should be a tipping point at which LUNA's market cap is close to, or even less than, TerraUSD's. When this happens, TerraUSD's reserve assets will be less than its market value, and a run will occur. In addition, under the crazy run, no matter how much LUNA is issued, it will not help. On the contrary, the value of LUNA will fall more rapidly, so that LUNA and TerraUSD may quickly go to zero together. The concept is analogous to the Schwarzschild radius in physics, where nothing can stop a body from collapsing into a black hole if its radius is smaller than the Schwarzschild radius. Similarly, other algorithmic stablecoins are algorithmically linked to something that a project doesn't have. Whether it's bitcoin upside down, Ethereum, the U.S. dollar, or its equivalent, you're looking for security. In fact, there's no absolute security in all financial activities, only a fully fledged currency reserve is safe. As soon as there is an extreme risk event that does not own the assets to which it is linked, the system will quickly collapse.

The value of Terra, which is a stablecoin blockchain protocol, LUNA's main role is to maintain stablecoin anchoring algorithmically through pledge and destruction mechanisms. It can be an elastic stabler system. Terra's stablecoin can be used to benchmark real assets such as the DOLLAR, Korean won and euro, while LUNA has the ability to pledge, distribute dividends and vote. The long-term view is to capture the value of the platform. Just like building an upgraded ecosystem, the stronger the ecosystem, the stronger you are. LUNA means that the more powerful the platform, the more powerful it is.