What is Terra (LUNA)?
Terra (LUNA) is the native coin of the new Terra blockchain, launched after the chain split in May 2022. The older network continues under the name Terra Classic. Unlike its predecessor, the current chain does not rely on an algorithmic stablecoin; it focuses on smart contracts and decentralised finance applications instead.
What can LUNA holders do on the network?
LUNA is the main way to participate in the network’s operation. Holders can bond (stake) their tokens to a validator, helping produce blocks and earning a share of transaction fees. To encourage this, the protocol mints new LUNA at a fixed annual rate and distributes it to participants.
The token also carries governance weight. Voting with LUNA allows holders to influence technical upgrades and decide how community funds are spent. On-chain applications on Terra require LUNA for transaction fees as well.
How did Terra's past shape its current structure?
The project was founded in 2018 by Do Kwon and Daniel Shin. The original chain hosted UST, a stablecoin whose value was balanced by LUNA. In May 2022, UST lost its peg to the dollar, triggering a collapse of both assets.
The community chose to fork the chain. The old one became Terra Classic, while a new Terra blockchain went live on 28 May 2022 with a supply of 1 billion LUNA. Of this, 70% was allocated to users who held assets on the legacy chain during snapshots taken before and after the crisis, distributed gradually over two years. The remaining 30% was reserved for a community pool. The new chain abandoned the algorithmic stablecoin model altogether, continuing as a smart contract platform.
