Terra operates as a blockchain protocol that utilizes stablecoins, pegged to fiat currencies, to facilitate globally stable payment systems. Per its white paper, Terra blends the stability and widespread acceptance of traditional currencies with Bitcoin's (BTC) resistance to censorship, aiming to offer quick and cost-effective transactions.
The development of Terra started in January 2018, with its mainnet officially launching in April 2019. By September 2021, it provided stablecoins linked to the U.S. dollar, South Korean won, Mongolian tugrik, and the International Monetary Fund's Special Drawing Rights basket of currencies. There are plans to introduce more options.
On May 28, 2022, the new chain's genesis block was created, intended for future transactions under the name Terra (LUNA), while the original Terra Chain was renamed Terra Classic. The initial native token, LUNA, was rebranded to LUNA Classic (LUNC). Additionally, all network stablecoins (such as UST, KRT, EUT) have been renamed to Terra Classic stablecoins (USTC, KRTC, EUTC). The new chain will not feature Terra stablecoins.
Some believe the "classic" label references the Ethereum / Ethereum Classic split in 2017. CEO Do Kwon has stated that the 2022 UST crash mirrors the impact of Ethereum’s DAO hack in 2017.
What is Luna Classic (LUNC)?
Luna Classic (LUNC) serves as the original native token for the Terra blockchain, initially released in August 2018. It existed before the introduction of the newly branded Terra (LUNA) and continues to function with the original Terra ecosystem's code.
The core role of this native token was to stabilize the price of the algorithmic stablecoin, $UST. The UST stablecoin's value was tied to the US dollar through the minting and burning of UST tokens to adjust supply and demand accordingly. However, in May 2022, UST lost its peg and collapsed. As a result, the algorithm produced trillions of LUNA tokens, leading to a hyperinflationary spiral that decreased the value of the original LUNA token by 99%.
Read more: The full breakdown of the Terra Crash
How do Terra (LUNA) and Terra Classic (LUNC) differ?
Both tokens coexist due to the implementation of a proposal known as Terra Ecosystem Revival Plan 2. This plan involves forking the existing blockchain to create a new chain, while maintaining the previous version.
Per the recovery strategy, the existing chain and token were renamed Terra Classic. The new LUNA tokens were distributed to previous LUNA and UST holders before the depeg and subsequent crash.
Who Founded Terra Classic?
Terra was established in January 2018 by Daniel Shin and Do Kwon. They envisioned the project as a means to accelerate the adoption of blockchain technology and cryptocurrencies by emphasizing price stability and user-friendliness. Kwon became the CEO of Terraform Labs, the company behind Terra.
Before starting Terra, Shin co-founded and led Ticket Monster (TMON), a prominent South Korean e-commerce platform. He also co-founded Fast Track Asia, a startup incubator that collaborates with entrepreneurs to create fully operational companies.
Kwon had previously founded Anyfi, where he served as CEO, a startup offering decentralized wireless mesh networking solutions. He has also held positions as a software engineer at Microsoft and Apple.
What Distinguishes Terra Classic?
Terra sets itself apart by utilizing stablecoins pegged to fiat currencies, merging the borderless advantages of cryptocurrencies with the consistent value of fiat money. It maintains its one-to-one peg through an algorithm that adjusts the stablecoin supply according to demand. LUNA holders are incentivized to exchange LUNA and stablecoins at beneficial rates, either expanding or contracting supply to keep pace with demand.
Terra has formed several partnerships with payment platforms, particularly in the Asia-Pacific region. In July 2019, Terra partnered with Chai, a South Korea-based mobile payments app, where transactions made through the app on e-commerce sites are processed via the Terra blockchain. Each transaction incurs a merchant fee averaging 2%–3%.
The Terra Alliance, a coalition of businesses and platforms supporting Terra's adoption, also backs Terra. In February 2019, it was announced that e-commerce platforms from 10 countries, with a user base of 45 million and $25 billion in gross merchandise value, were part of this alliance.
How Many Terra Classic (LUNC) Coins Are In Circulation?
By August 2022, Terra Classic (LUNC) had a total supply of 6.9 trillion, with 6.5 trillion LUNC in active circulation.
How Is the Terra Network Secured?
The Terra blockchain secures itself through a proof-of-stake consensus mechanism, based on Tendermint. LUNA token holders stake their tokens as collateral to verify transactions, earning rewards proportional to the staked amount. Tokenholders can also delegate transaction validation to others, sharing in any revenue generated. Terra provides further guidance on best practices for validator nodes to help strengthen network security.
In May 2019, soon after Terra’s mainnet launch, CertiK, a blockchain verification and penetration testing firm, conducted a security audit of the network. This audit assessed the network's economic model to safeguard against market manipulation, as well as its architecture and coding language. CertiK concluded that Terra’s "modeling and mathematical reasoning" were "considered sound," though it chose not to comment on the blockchain's performance.
Where Can You Purchase Terra Classic (LUNC)?
Most cryptocurrency exchanges that previously supported Terra Luna continue to do so with Terra Classic (LUNC). Luna Classic is currently available on major platforms including Binance, KuCoin, Kraken, Huobi Global, PancakeSwap (V2), MEXC, and Gate.io.
Want to keep an eye on LUNC's real-time updates? Download the CMC mobile app.
