What Is Luna Classic (LUNC)?
Launched in August 2018 in a token sale mediated by the investment division of multiple cryptocurrency exchanges, the Terra blockchain, featuring LUNA coin as its native token, is a stablecoin blockchain designed for global remittances with a stable cryptocurrency pegged to various fiat currencies.
The aim of developers in creating the Terra ecosystem was to encourage blockchain adoption by creating one with the decentralized, censorship resistant, permissionless features of blockchains like Bitcoin (BTC), yet without the price volatility associated with most cryptocurrencies. To accomplish this price stability, developers created the Terra blockchain, which maintains blockchain consensus via a combination of proof of stake (PoS) and proof of work (PoW), so that the network can remain open source, distributed, and permissionless.
It maintains price stability by allowing network users to choose from among different fiat currencies. LUNA coin price is utilized within the Terra protocol to stabilize the price of Terra stablecoins while storing and maintaining and ideally growing financial value for holders in the Luna price. Stablecoins for price stable global remittances on the Terra chain include ones pegged to the US dollar, the Korean won, the Mongolian tugrik, and even the International Monetary Fund's (IMF) Special Drawing Rights basket of currencies (an international reserve instrument used to supplement member country's reserves).
Who Are the Founders of Terra Classic?
Terra was founded in January 2018 by Daniel Shin and Do Kwon, two Busan, South Korea based software developers and entrepreneurs. Before founding Terra with Kwon, Shin co-founded and led the development of Ticket Monster (nicknamed TMON), a disruptive e-commerce platform that has made major waves in South Korea. He then went on to co-found another successful venture: Fast Track Asia, an incubator for startups that sticks with entrepreneurs from early stage all the way through to profitable business operations.
The duo started Terraform Labs, organized as a private, for-profit company, to manage the launch, growth, development, and marketing of Terra and LUNA coin. Kwon took the role of CEO to head up the labs. The founders hoped, with their contribution to the cryptocurrency industry, to inspire and hasten mass adoption of blockchain technology and the blockchain ethos around the world, with a practical, price stable, global remittance network.
How Does LUNA Work?
LUNA coin is used by the Terra blockchain to stabilize the price of its stable coins (for example, TerraUSD or UST). So Terra price is a complex function based on a network protocol built to stabilize the floating exchange rate between Terra's stablecoins and the fiat currencies to which they are pegged. So when the exchange rate of 1 TerraUSD for 1 US dollar floats above the dollar, the protocol mines (or creates) a new TerraUSD coin and sells it for LUNA tokens.
This increases the supply of TerraUSD and thus decreases its market value to bring it back in line with the currency to which it's pegged. This allows users of TerraUSD to send and receive payments over the network to trust that the payment they received will still be worth the same amount over a reasonable period of time, and not be subject to market shocks and price volatility.
This will also cause the LUNA coin price to increase, however slightly, by decreasing its relative supply against the other tokens in the ecosystem. Conversely, LUNA coin price faces a relative decrease when the protocols generate LUNA to sell for network stablecoins to reduce their supply when the float below the current market exchange rate of their fiat currency pegs.
Overall LUNA coin provides liquidity for this market making protocol that keeps stablecoins on the network price stable, and LUNA price reflects these constant adjustments of the system in the short term, and over the longer term the overall health and value of the Terra blockchain.
If you want to buy LUNA go and check out our guide on how to buy Terra Luna?
