What is Terra (LUNA) crypto and why is it grabbing attention?

3 min read | February 23, 2022 10:30 PM AEDT | By Raza Naqvi

What is Terra (LUNA) crypto and why is it grabbing attention? — Image source: © Moxumbic | Megapixl.com

Why is Terra (LUNA) crypto gaining momentum?

On Tuesday, February 22, Terra and the Luna Foundation Guard (LFG), which supports the Terra Network, announced the sale of LUNA tokens worth US$ 1 billion.

The LUNA tokens were sold to Three Arrows Capital and Jump Crypto. It is believed that the Luna Foundation will use the sale proceeds to create a UST Forex Reserve.

Notably, the LFG is a Singapore-based non-profit organization, and it was created to support the Terra ecosystem. Meanwhile, UST is an algorithm-driven stablecoin that seems popular within the decentralized finance (DeFi) ecosystem.

The UST is pegged to the price of an American dollar, and its market capitalization is reportedly worth US$ 12 billion.

Luna Foundation aims to create a reserve to act as a release valve for redemptions of the stablecoin. The organization reportedly aims to keep the price of UST pegged to the US dollar during periods of sharp selloffs in the crypto market.

Unlike stablecoins issued by Tether and Circle, algorithm-based stablecoins remain pegged to market incentives and don't need collateral to maintain their price.

Bottom line

The Terra network is a blockchain protocol that powers price-stable global payments systems through fiat-pegged stablecoins. The development of this network began in 2018, and its mainnet was launched in 2019.

The LUNA crypto stabilizes stablecoins of Terra network, and its holders can use the native token to vote on governance proposals.

According to CoinMarketCap, Terra crypto's 52-week high is US$ 103.33 per token, and its 52-week low is US$ 3.94 apiece.

Also Read: Why is Bitgert (BRISE) crypto grabbing attention?

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