What Is TerraUSD (UST) and How Does It Work?
TerraUSD (UST) is the Terra blockchain’s decentralized and algorithmic stablecoin. It’s a scalable, yield-bearing currency that’s tied to the US Dollar in terms of value. TerraUSD was designed to provide value to the Terra community and to provide a scalable alternative for DeFi in the face of serious scaling issues that other stablecoin leaders, such as Dai, are experiencing. As a result, TerraUSD users should expect increased scalability, interest rate accuracy, and interchain usage.
TerraUSD has a number of features that make it a standout stablecoin rival. UST satisfies the criteria of the DeFi protocols it employs without sacrificing scalability thanks to its minting method. By simply incorporating TerraUSD as a payment option, UST may be readily added to crypto wallets. DApps are another area where TerraUSD has proven its worth. Systems that generate fungible synthetic assets and track real-world asset prices utilize UST as a pricing benchmark.
TerraUSD (UST) was released in September 2020 (in partnership with Bittrex Global) and has since established itself as the most scalable stablecoin. UST may be used alongside LUNA, Terra’s non-stablecoin cryptocurrency, or as a stand-alone token.
Who are the TerraUSD Founders?
Terra (LUNA) was formed in April 2019 by Do Kwon and Daniel Shin. They will debut TerraUSD on Bittrex Global in September 2020. TerraUSD has outperformed numerous stablecoin competitors in the market since then, including GUSD (Gemini) and PAX (Paxos). Terra is TerraUSD’s own blockchain, which Terraform Labs created (a subsidiary of Terra Alliance).
Do Kwon is the CEO of Terraform Labs. He worked as a software developer for Microsoft and Apple in the past. He was also the founder and CEO of Anyfi, a company that provides decentralized wireless mesh network solutions. Forbes included Kwon to its list of the world’s most successful entrepreneurs under the age of 30.
Daniel Shin, one of the company’s co-founders, is an accomplished economist and entrepreneur. He co-founded Fast Track Asia, a business incubator, and co-founded and led TMON (Ticket Monster), a South Korean e-commerce platform, before joining Terra Alliance.
What Makes TerraUSD (UST) Unique?
- Enhanced Scalability: TerraUSD is an algorithmic stablecoin with a value equivalent to the face value of issued stablecoins, allowing for greater scalability. 1 LUNA reserve asset must be burned to issue 1 TerraUSD. TerraUSD’s monetary policy appears to scale almost infinitely, allowing DeFi projects to reach their full potential.
- Simple Swap: The Terra ecosystem’s stablecoins share 100% liquidity, which means you can exchange TerraUSD for TerraKRW (their stablecoin tied to the Korean Won) for a small cost.
- Potential for Passive Income: TerraUSD users can also earn passive income thanks to the Anchor protocol’s consistent interest rates. Anchor is a financing scheme that guarantees a 20% return on UST investments. Rewards in PoS chains provide additional and consistent revenue, which are kept stable by commissions and inflation. This subtlety will allow for the formation of a credible interest rate.
- Interoperability: TerraUSD uses the Dropship bridge technology to connect blockchain ecosystems. Dropship connects TerraUSD to a variety of DeFi and DEX systems, as well as moving assets between chains. The value of TerraUSD is determined by LUNA supply and demand. As a result of the Dropship protocol’s scalability, a steady UST cost is ensured.
TerraUSD (UST is a cryptocurrency based on the Terra blockchain. There is no technical support for the UST token. The generation of the UST is instead aided by the burning of LUNA tokens.
The value of the UST fluctuates according to supply and demand for the asset, as well as the value of the US dollar. LUNA holders can sell tokens for UST when the value of the UST surpasses a dollar. Furthermore, as a result of the increased UST supply, LUNA prices are rising as well. UST tokens can be sold for Terra when supplies are cut for profit (LUNA). The UST price is returned to the target level as a result of this action. As a result, a specific number of LUNA is used, causing scarcity and increasing their worth.
TerraUSD (UST) is one of the most prominent stablecoins in the cryptocurrency industry, with a maximum supply of roughly 1.93 billion UST as of June 2021. Its scalability and usefulness make it one of the most notable stablecoins in the cryptocurrency market.
What Security Measures Does the TerraUSD Network Take?
TerraUSD (UST) is a cryptocurrency that is tied to the price of a dollar and is backed by Terra (LUNA). Through the seigniorage process, LUNA is an asset reserve that protects the UST’s stability and security (income received from the emission of money).
Miners play an important part in Terra’s security as well. Miners take part in a proof-of-stake (PoS) consensus, which helps Terra maintain stability by absorbing short-term demand fluctuations. After all, one of the most important needs for security and stability is constant mining demand. As a result, the TerraUSD protocol aims to give consistent payouts regardless of the economic situation. TerraUSD will be able to compensate individuals that defend and grow the network in this way.
What is the best place to buy TerraUSD (UST)?
To purchase TerraUSD (UST), you’ll need Bitcoin or Ether to exchange for the token on the exchanges where it’s listed. KuCoin, Uniswap (V2), Bittrex, Bitfinex, Gate.io, PancakeSwap (V2), Sushiswap, Terraswap, 1inch Exchange, MEXC, OpenOcean, and DODO BSC are among these exchanges.
How many UST confirmations are required?
35 network confirmations are required for UST. Confirmation of transactions is something you should know about.
UST is hosted on which blockchain network?
The Ethereum blockchain is used to host UST.
Here’s the highest and lowest amount that you can withdraw:
To maintain the network health and efficiency, Coinbase has implemented methods on-chain and through our platform.
Minimum and maximum volumes for each currency that clients can transmit over the blockchain are among these measures.
As a minimum, 0.000000000000000001, and as a maximum, 250,000.
TerraUSD is an algorithmic stablecoin with a minting cost equal to the face value of the stablecoins issued — to mint 1 TerraUSD, only $1 of the reserve asset ($LUNA) must be burned. TerraUSD is an indefinitely expandable monetary policy, allowing DeFi applications and protocols to realize their full potential. TerraUSD (and TerraKRW) may be traded on-chain for TerraKRW (and vice versa) with negligible fx costs. TerraUSD will make use of KRT’s track record and liquidity to provide DeFi to millions of people.
While lending markets on USDC and Dai have allowed users to earn stablecoin returns, rates have been extremely unpredictable due to cyclical speculation in the underlying tokens. When there is a large demand for ETH, the interest rate rises, and when there is low demand, the interest rate falls.
The bulk of PoS networks features stable block rewards based on transaction fees and inflation, resulting in a much more predictable APR. Most importantly, Anchor yield is unrelated to market sentiment (i.e., it is not influenced by leverage) and will serve as a beneficial contrast to the rest of DeFi’s speculative frenzy.
According to Anchor, TerraUSD will soon be the first censorship-resistant currency to offer a savings experience comparable to a typical savings account.
TerraUSD connects and enables blockchains
Stablecoins have shown to be a valuable user onramp and primitive for decentralized apps, but they are only accessible on a few chains outside of Ethereum, impeding the development of a healthy application ecosystem.
What are Terra’s intentions for the future?
Terraform Labs intends to use Terra’s blockchain and related cryptocurrencies, including one tied to the Korean won, to build a digital financial system that is independent of big banks and fintech companies. So far, the Chai payment app, which is built on Terra’s blockchain, has been its major source of growth in Korea, where consumers have used it to buy things in businesses, like coffee. The company’s linked Mirror trading app, according to Kwon, is growing in China and Thailand.
Meanwhile, Terraform Labs’ current $150 million in financing would be used to invest in companies that develop financial products on Terra’s blockchain, according to Kwon. He compared scouting and investing in other groups to a “Y Combinator demo day sort of circumstance,” referring to the prominent early-stage investor Y Combinator’s popular startup pitch event.
According to Ryan Watkins, a senior research analyst at cryptocurrency consultancy Messari, the combination of all these Terra-specific financial apps suggests that Terraform Labs is “essentially constructing a type of bank.”
In addition to cryptocurrencies, the Anchor app, high-yield savings account for holders of Terraform Labs’ digital currencies, is one of the company’s other ventures. Meanwhile, users may use the company’s Mirror program to generate synthetic financial assets that resemble more traditional ones, such as “tokenized” corporate stock representations. These synthetic assets are designed to let people like “a tiny retail trader in Thailand” acquire shares and “have some exposure to the upside” of equities that they wouldn’t have been able to gain otherwise, according to Kwon. However, some opponents believe that the Securities and Exchange Commission in the United States will ultimately regulate synthetic stocks, which are now unregulated.
Terra’s blockchain is powered by a “limited number of nodes,” according to Messari’s Watkins. Nodes are the machines that keep the system functioning. He claims that this reduces latency, which may otherwise hinder the processing of financial transactions.
Terra, on the other hand, is less “decentralized” than other blockchain systems like as Ethereum, which is supported by thousands of globally linked computer nodes. Some blockchain purists may find Terra less tempting as a result.
To summarize, TerraUSD (UST) is the first decentralized stablecoin that provides interest earnings, incredible scalability, and easier interchain movement
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