Terra is a decentralized proof of stake blockchain network. The network is supported by a basket of algorithmic stablecoins which are pegged to fiat currency. Further, there is in-house governance and staking token called LUNA. The project has been developed by TerraForm Labs, Seoul, South Korea.
How scalable is the Terra Network?
Despite being a layer one blockchain, Terra can scale up to 10,000 Transactions Per Second (TPS) with a block time of six seconds.
What are all integrations available with Terra Network?
LUNA is the native token of the Terra Network. It is the foundational asset of the entire ecosystem. By collateralizing LUNA, the Terra network achieves the price stability of Terra Stablecoins. In the future, Terra’s transaction volume would determine the value of LUNA.
LUNA staking rewards
Terra’s value chain is based on LUNA. The supply of stablecoins is control by the value of staked LUNA coins. For Example, in case of an increase in the demand for stable coin UST (Terra USD), to ensure the stability of the price of UST, the Terra network would mint more UST. To mint UST, equal the value of LUNA tokens that are staked should be burned, thus leading to an increase in the value of LUNA.
An average of 10.67% per annum can be earned by staking LUNA.
In short, an increase in the demand for Terra stablecoins would lead to a decrease in the supply of LUNA and would increase its market value.
Staking rewards provided to the stakers come from the following sources:
Source of Revenue
Gas fee is the network fee charged by the platform for validating a particular transaction.
Tax is a form of stability fee charged on each transaction ranging from 0.1% to 1% (capped at 1 TerraSDR)
The oracle process of Terra network provides rewards to the participating validators from the Seigniorage Pool.
Who are Valida tors?
Validators are the network participants who run a full note of the Terra Blockchain Network. They play the most crucial role in the network consensus mechanism.
Who are LUNA Delegates?
LUNA token holders cannot stake their tokens directly on the network. They would delegate their tokens to a validator. Once they delegate their token to a network validator, they would receive a token bLUNA (Bonded Luna). This is a kind of receipt of LUNA tokens being bonded.
The network allows only the top 100 validators (based on the value of bonded LUNA) to sign a block. Thus, these top 100 validators make the transaction validating set known as delegates.
What are the use cases for LUNA Token?
1. Staking to validate blocks on the network
2. Staking to provide price feeds
3. Keep stablecoins stable i.e., pegged to the respective fiat currency