Terra: everything you need to know about LUNA2

What is Terra?

Terra LUNA 2.0 (LUNA2) is a token within the Terra ecosystem. Founder Do Kwon designed this token as a regeneration strategy after the collapse of the Terra UST stablecoin. This resulted in a fork of the Terra blockchain.

The Terra Luna blockchain was split into LUNA Classic (LUNC), the original blockchain, and the Terra LUNA 2.0 (LUNA2) blockchain, a new chain. Terra is the name of the 'new' blockchain, known as LUNA 2.0, while LUNA Classic (LUNC) is now the name of the native token of the original Terra LUNA blockchain.

How does Terra work?

The Terra LUNA 2.0 blockchain uses a Proof of Stake consensus mechanism. The network has 130 validators who possess varying levels of voting power based on the amount of LUNA2 bonded to a node. Gas fees and a fixed annual inflation rate of 7% for LUNA 2.0 are used to generate rewards.

The LUNA2 token

Luna 2.0 or Terra 2.0 is the new token that emerged from the hard fork of the Terra blockchain network. LUNA2 aimed to rescue the Terra Luna ecosystem following the collapse of the UST stablecoin in May 2022.

Most of Terra's dApps and features migrated to the new chain. However, the original Luna chains and tokens will remain in use. The original LUNA token was renamed LUNC, 'LUNA Classic,' after the fork.

As compensation for their loss, LUNC (Luna Classic), USTC (UST Classic), and aUST (UST stake) holders automatically received new LUNA2 tokens upon their creation.

The Technology Behind LUNA2

To participate in the network and earn rewards, LUNA2 holders choose a validator and delegate their tokens to them. Validators, also known as delegators, often stake their own tokens as well. Terra LUNA also employs a commission system where rewards are allocated to delegators.

The incentives for participating generated by Terra 2.0 validators vary depending on the voting power of validators. Those with more voting power earn higher rewards, which are then distributed across a broader pool of delegators.

Delegating can be done using the Terra Station interface. Validators can be penalized for misconduct, potentially resulting in a reduction of staked LUNA 2.0. This process is referred to as slashing.

The Terra ecosystem

Within the Terra Luna ecosystem, there are several activities you can engage in:

• Participate in DeFi: Terra has an extensive Decentralized Finance (DeFi) ecosystem. Here, you can borrow, lend, trade tokens, or earn interest.
• Governance: Those who own LUNA tokens can participate in decision-making within the Terra network. This means you can vote on proposals and protocol changes.
• Build and Develop: Developers can build on the Terra network and create new applications.
• Staking and Validation: By staking LUNA tokens, you can help secure and validate the Terra network. This process is used to verify and validate transactions.
• Trade on Exchanges: You can trade Terra's native tokens, including LUNA2, on various cryptocurrency exchanges.
• Participate in New Projects: Terra has an active and loyal community that has worked hard to address the issues surrounding the collapsed Terra stablecoin. Anyone can participate in new opportunities and projects created within the ecosystem.

Benefits of Terra

What are the benefits of Terra (LUNA2)?

• Low transaction fees and high scalability.
• A substantial ecosystem for developers.
• A loyal community working to rejuvenate the ecosystem.

Drawbacks of Terra

What are the drawbacks of Terra (LUNA2)?

• Terra has suffered significant reputational damage following the collapse of its stablecoin and the arrest of founder Do Kwon.
• Price volatility.
• Despite community efforts, the Terra price and ecosystem have not recovered from the events in 2022. Many traders and exchanges appear to have little confidence in a recovery.

Who is the founder of Terra?

The founders of Terra Labs are Do Kwon and Daniel Shin. Kwon was previously a prominent figure in the blockchain industry. With his innovative entrepreneurial spirit, he played a significant role in the development and growth of the Terra ecosystem.

After the collapse of USDT, the Terra Luna stablecoin, Kwon and Terraform Labs were accused of offering unregistered securities and misleading investors. In September 2022, the South Korean government issued an arrest warrant for Kwon, who seemed to have disappeared without a trace. After months of Interpol's search efforts, Kwon was eventually arrested and detained in Montenegro in March 2023.

Price forecasts

In 2026 experts expect a minimal price of €0.000426 and a minimal price of €0.001400 in 2031.