Throughout 2020 a handful of new stablecoins were launched and many analysts have suggested that stable Bitcoin growth is the backbone of the crypto sector and partly responsible for the current Bitcoin rally.
For many traders, fixedcoins provide a safe place to shelter during volatile times in Bitcoin and altcoins but there are other ways to interact with these fiat-pegged assets.
The Terra Protocol aims to create a programmable algorithmic stablecoin available on every blockchain. Similar to its better known competitor, Maker (MKR), Terra Protocol has a native crypto-fixed asset called LUNA.
The project was created by a partnership of 15 major e-commerce companies in Asia serving more than 30 million consumers. Its ecosystem is focused on building efficient, scalable, competitive programmable payments.
Prior to its ICO in March 2019, the company raised $ 32 million in a seed financing round that included Hashed, Polychain Capital, Huobi, and XRP Arrington Capital.
A key element of Terra is the payments app Chai, which now has over a million downloads on the Android store. Consumers can accumulate redeemable points for merchant rewards with Chai partners.
These partners include TMon, Qoo10, Yanolja, Megabox, and Musinsa, which offer benefits in exchange for promoting marketing to Chai’s member base.
The company also offers a debit card called the Chai Card, which was launched in June 2019. On December 9, Chai received a $ 60 million Series B investment from SoftBank and Hanwha Investment & Securities.
Stablecoin mechanism and product
The protocol runs on a proof-of-proportion blockchain where miners need to share the native cryptocurrency (LUNA) to mine Terra transactions.
The market cap for TerraUSD (UST) fixedcoin recently crossed above $ 150 million, a significant milestone given the token launched just 3 months ago.
According to Terra’s white paper, LUNA
“Ensures price stability through an elastic currency supply, enabled by fixed mining incentives. It also uses seigniorage created by its manning operations as a stimulus for a transaction, thereby facilitating adoption.”
Unlike most devolved funding applications, LUNA uses its own miners as oracles. The weighted median of votes achieves the target fiat prices, and miners are rewarded for accuracy.
Currently, most of the product revenue comes from purchasing e-commerce clients using the CHAI app. This means that LUNA ticket holders have great incentives to stay.
On July 6, Terra blockchain introduced its savings protocol, called Anchor. Unlike most DeFi applications, it offers fixedcoin protected by an interest-paying principal.
Anchor takes TerraUSD (UST) stable deposits and will eventually be able to use the funds to acquire staking positions on various blockchains. This enables interoperability with test-share block chairs and will also generate passive income for depositors.
It is worth noting that Anchor does not include Ethereum ecosystem staking opportunities as they do not offer proof-of-stake.
Synthetic assets and referral marketing
Despite achieving important milestones, including its USD stablecoin and DeFi applications, LUNA has been mimicking the performance of its Synthetix (SNX) and Ren (REN) peers.
More recently, on December 4 LUNA launched a DeFi initiative called Mirror Protocol, enabling synthetic assets by providing price exposure on the chain. This includes stocks, commodities, and ETFs, and the platform uses Band Protocol (BAND) oracle solutions for pricing.
During this process, a few problems emerged. Ahead was the lack of pricing mechanisms during weekends when traditional markets are closed. Another issue was the 150% collateral requirement in LUNA stablecoin.
The most recent product reveal happened on December 10 when Terra launched BuzLink Protocol, a marketing platform that rewards the entire referral chain when sold.
The marketing tool distributes stablecoin rewards to product referrers over the Terra blockchain. Therefore, all consumers who share the product link benefit when a consumer purchases the product.
Data from TheTie also shows that increases and decreases in social network activity have coincided with price spikes. This suggests that traders can benefit from close monitoring of Terra Protocol partnerships and publications to detect less active periods as these are typically linked to price stagnation.
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