What does the company/project do?
Terra is a price-stable cryptocurrency designed for mass adoption and decentralized applications. The protocol behind eliminates volatility issues by expanding and contracting the supply, hence to stabilize the unit price. According to the people behind the project, this technique would allow for a better adoption amongst the general public, since it mitigates risks of currency failures and Soros attacks.
What are the tokens used for and how can the token value appreciate?
Tokens are to be implemented throughout a wide range of commerce platforms, as a medium of exchange at checkout when purchasing products and services. The value of the token will be pegged to a fiat currency, such as the US dollar (for the time being). The reserve token provided by Terra is called Luna token which comes with a fixed supply. The Luna token generates rewards from Terra transactions and hence appreciates in value through the usage of the Terra protocol.
How advanced is the project?
The project is currently backed up by four of the world’s largest cryptocurrency exchanges, being these Dunamu, Huobi Capital, OKEx and Binance, who have all come together on a deal that is backing up Terra with $32 Million US dollars in capital.
Nevertheless, the deal is a token-based investment round rather than an equity one. Terra plans to hold a private sale in a couple of weeks in order to pour more funds into the project.
Ranging from mathematicians to computer scientists and financial experts, with backgrounds from several different companies such as Apple, Microsoft and The Federal Reserve Bank of New York, this team brings a wide variety of skills that make up the Terra protocol.
Daniel Shin is one of the Co-founders. He is also the founder and former CEO of TicketMonster, a Korean e-commerce platform. He is also a co-founder and board member of Fast Track Asia, a company builder that has established and sold multiple other businesses such as Fast Five and FoodFly. Daniel is known for his extensive expertise and deep networks in e-commerce. He has a BS in Economics from Wharton Undergrad.
Do Kwon is another Co-founder. He also founded Anyfi, a company from which he was also the CEO. During his time at Anyfi, Do co-invented and several of the company’s key patents around decentralized networks and routing systems. He was also a software engineer at Microsoft and Apple, and studied Computer Science at Stanford.
Nicholas Platias is the Head of Research. Having previously founded Guru Labs, he also developed algorithms and distributed systems at Nest and RelatelQ. Nicholas studied Math and Computer Science at Stanford and has won numerous medals at the Math Olympiads.
Evan Kereiakes is the Core Researcher. He worked at the Federal Reserve Bank of New York for over 7 years. He was the Head Japanese Portfolio Manager for the foreign reserves portfolio. Prior to that, he was an Economic Analyst at the US Treasury, having also worked with the White House Economic Council. Evan studied engineering at Duke and the University of Illinois, also holding an MBA from the University of Chicago.
Don Kim is the Head of Business. Don was a Business Development Manager at the Korean cryptocurrency exchange GOPAX. Prior to that he was a Military Diplomacy Officer for the Korean Air Force, and studied Government at Harvard.
Wayne Shu is the Head of Strategy. Having left Stanford to participate in numerous projects, Wayne sees potential in cryptocurrencies to change the way modern finance works.
KJ Lee is the Head of Product. He brings to the table eighteen years of experience in project management and development. KJ is also former Head of Development at Mesh Korea, having also passed through TicketMonster as Product Owner. He is an expert in logistics, supply chain and payment processes.
CJ Han is the Head of Finance. With eight years of experience in portfolio management as well as in trading fixed income, currency and commodities, he also holds a BA in Economics at the University of Pennsylvania.
Gigi Kwon is the Head of Communications. She was a Marketing Manager at Uber, serving as the local lead for the company’s marketing and Uber Eats’ CRM and paid online campaigns. Gigi is also a former Associate at a PR agency based in New York, holding a Communications title from the University of Pennsylvania.
The Terra protocol is backed up by the native Luna tokens, a token with a fixed supply that generates rewards from Terra transactions, paid out for contributions to the system’s price-stability and equity. This in turn incentivizes users to deposit Luna tokens into the reserve, as deposits yield income from transaction fees collected from the network. On the other hand, such reserve also guarantees the solvency of the network, since the market value of the reserve will always be greater than the Terra in circulation.
The Terra protocol allows decentralized applications to create their own native tokens, which will then be pegged to Terra and eventually achieve price stability. The Terra protocol takes care of collateralization and in exchange charges a transaction fee. This is the revolutionary part of the protocol because it implies that every token created upon the protocol can achieve price stability.
Strength and Opportunities
Having managed to raise capital from four of the world’s largest crypto exchanges, together with a system that seems to guarantee the stability of the coin, Terra proposes an attractive method not only for payment systems, but also for pushing cryptocurrencies mainstream. Moreover, the team behind the project gathers all necessary skills to make things work, throughout a clear roadmap and white paper that can be found on their webpage.
Because they have such a robust backup, adoption of this coin, protocol and system could be aligned with the interests of companies that want to conduct business with cryptocurrencies worldwide, as long as they manage to keep control of the pegging system-to-fiat that Terra currently relies on.
Weaknesses and Threats
Terra is not the only blockchain platform that aims to achieve price stability. In fact several other projects including MakerDAO and Basis have very interesting approaches to solve this incredibly difficult problem that cryptocurrency adoption faces. These projects have already achieved funding from leading Venture Capital firms and have made significant progress in the course of the last months. It remains to be seen which cryptocurrency can provide a protocol that truly guarantees price stability and at the same time will experience mainstream adoption by users and commercial platforms.
Because the currency is being backed up by a large array of investors, and because the team behind have proven to have the necessary skills to manage such a system, Terra makes up for a good alternative not only to invest but also to adopt through payment systems. Terra proposes an attractive solution to the way cryptocurrencies work. Nevertheless, just as with other stable coin protocols no real world proof exists so far that ensures that the price stability can be guaranteed in the case of extreme market events.
* The information contained in this article is for education purpose only and not financial advice. Do your own research before making any investment decisions.