In 2018, some of the largest crypto exchanges in the world made a $32 million investment in the Terra project. The four exchanges that invested in the project were OKEx, Dunamu, Binance Labs, and Huobi Capital. Daniel Shin, who is the founder of TMON, a Korean e-commerce company that’s valued around $1.7 billion, created Terra. It was the first time major global exchanges had invested in the same project. Besides these exchanges, the project received funding from venture capitalists such as 1kx and Arrington XRP.
A Decentralized Stablecoin
The Terra project spawned the Terra stablecoin, whose stability is maintained by contracting and expanding the supply of the coins via an algorithm. According to the Terra whitepaper, when the price falls below the pegged price, the supply is contracted so that the price starts rising. If it goes in the reverse direction, the supply of Terra is increased to lower its price.
To expand the supply, more Terra is distributed into the market. Contractions are more challenging. This is why the project came up with the Luna crypto coin. The Luna coin serves as collateral to the Terra ecosystem. Essentially, every time Terra is used in a transaction, a fee is paid to Luna. The fee goes to Luna’s PoS miners. During a contraction, the supply of Luna is increased in the short term and the project utilizes the extra Luna to buy back Terra coins, which are then burned. This entire process is done using an algorithm.
Terra has already managed to enlist some very important partners. 15 e-commerce platforms including well-known names such as Pomelo, Qoo10, Woowa Brothers, and Tiki have already joined Terra’s ecosystem. Between them, these companies have about 40 million customers and about $25 billion in transaction volume annually.
Recent Developments from Terra
At the start of October, Terra made four important announcements during the Korean Blockchain Week. The four announcements were mainly about its CHAI payments dApp. They were:
- CHAI will be used for offline payment at Korea’s biggest convenience store chain, CU
- CHAI will be available for use of Yanoji, a major hotel-booking platform in South Korea
- A CHAI debit card will be launched with Korea’s largest payments processor, BC Card
- Terra and Shinsegae Duty-Free are partnering to make international payments in Hong Kong possible
Why South Korea is perfect for Terra
Terra is focusing its attention on South Korea before it goes global. There are good reasons why the project is doing this. Some of the reasons are:
South Korea has Embraced Modern Technology
In many other regions of the world, new technologies take time to gain mass acceptance. However, South Korea is an exception to the rule. The nation was named the most innovative nation of 2019 by Bloomberg.
South Korea has Embraced Crypto
Despite making up less than 1% of the global population, about 30% of all crypto trading volumes in 2018 took place in the nation.
CHAI Already Has a Large Following
When the payment dApp was launched on the TMON eCommerce platform, it gained over 400,000 users in just three months. This is a sign that South Koreans have embraced Terra.
Image Source: Terra Twitter