Is Terra (LUNA) a Good Investment?

tl;drTerra (LUNA) is a decentralized financial infrastructure and blockchain protocol that introduces some unique concepts and theories to the market. The network leverages a native token, stable coin protocol, oracle system, and smart contracts to bring users programmable money for the Internet. Terra price today is $42.98 with a 24-hour trading volume of $1,296,310,634. LUNA price is down -3.7% in the last 24 hours. It has a circulating supply of 400 Million LUNA coins and a total supply of 971 Million. At the time of writing this post (Sep 13, 2021), LUNA's Return On Investment (ROI) over the past year was 14,065%, exceeded in 'Cosmos Ecosystem, Terra Ecosystem, Decentralized Finance (DeFi)' categories which had 347% growth over the past year. It exceeded the crypto market which had 12604% growth over the past year. LUNA's Twitter account saw a growth of 132% over the last months in the number of followers, which is considerable. However, the Telegram channel users had a 45% growth over the last months. LUNA's Market Capitalization rank followed an overall increasing trend, starting at the rank of 35-12 on July-Aug 2021, reaching 12 in Sep 2021. However, by the time of writing this post, LUNA's market cap rank is about 11, and its value is $15,315,016,747 Billion. Moreover, its liquidity score is 68% above the market's average score, making it relatively easier to sell in bear markets.
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Introduction

Terra (LUNA) is a decentralized financial infrastructure and blockchain protocol that introduces some unique concepts and theories to the market. The network leverages a native token, stable coin protocol, oracle system, and smart contracts to bring users programmable money for the internet here. One part of Terra's value contributions, payments, in essence, replaces the complicated payments value chain, including credit card networks, banks, and payment gateways with a single blockchain layer. 

Terra is a distributed ledger of account balances maintained by validators. These validators follow the Tendermint DPoS algorithm and vote on blocks. The Luna token is the native staking asset recognized by the Terra protocol and represents mining power, granting its staking validator access to transaction fees and miner rewards, allowing them to benefit from increased user adoption and growth within the Terra ecosystem. 

How Does Terra Stablecoins Work?

Unlike other decentralized algorithmic stablecoins like MakerDAO’s DAI, Fei Protocol’s FEI, and Ampleforth’s AMPL, which respectively rely on over-collateralization, fractional reserves, or rebasing to maintain their peg, Terra’s stablecoins leverage an elastic monetary policy to ensure price stability and growth. The elastic monetary policy means that Terra stablecoins achieve price stability by adjusting their supply according to real-time fluctuations in demand. Seigniorage plays a vital role in this. In monetary terms, seigniorage refers to the difference between the nominal value of money and the cost of producing it.

In Terra’s case, the protocol utilizes a dual token mechanism to capture the value and stabilize the price of its stablecoins. If UST deviates from its peg, the system uses LUNA to stabilize the price of UST by agreeing to counter-party anyone looking to swap UST and LUNA at UST’s target exchange rate of one U.S. dollar. To mint UST, users must burn an equivalent dollar amount of LUNA tokens. For example, to mint 1,000 UST, with LUNA’s current market price at $38.87, they would have to burn 25.72 LUNA tokens. On the other hand, to mint $1,000 worth of LUNA, the user would have to burn 1,000 UST. 

In essence, Terra stablecoins maintain price stability by leveraging market forces. When the value of one UST is below that of $1, users and arbitrageurs can burn one UST to get $1 worth of LUNA. When the value of one UST is above $1 dollar, they can burn $1 worth of LUNA to get one UST, collecting the “seigniorage” in the process.

The LUNA token serves as a volatility absorption tool that also captures rewards through seigniorage and transaction fees. When demand for Terra currencies increases, the system mints Terra currencies, earns LUNA in return, and then burns a portion of the earned LUNA, making the supply scarcer. Furthermore, as LUNA is used for validating Terra transactions through staking, LUNA stakers also earn transaction fees charged by the protocol. With this mechanism at work, Terra stablecoins maintain their peg without being over-collateralized, making them significantly more capital-efficient and scalable compared to other algorithmic stablecoins on the market.

Financial Analysis:

Terra price today is $42.98 with a 24-hour trading volume of $1,296,310,634. LUNA price is down -3.7% in the last 24 hours. It has a circulating supply of 400 Million LUNA coins and a total supply of 971 Million. At the time of writing this post (Sep 13, 2021), LUNA's Return On Investment (ROI) over the past year was 14,065%, exceeded in 'Cosmos Ecosystem, Terra Ecosystem, Decentralized Finance (DeFi)' categories which had 347% growth over the past year. It exceeded the crypto market which had 12604% growth over the past year.

Another critical factor in the success of any project is gaining public attention. Our data shows that LUNA's Twitter account saw a growth of 132% over the last months in the number of followers, which is considerable. However, the Telegram channel users had a 45% growth over the last months.

Over the last five months, LUNA's Market Capitalization rank followed an overall increasing trend, starting at the rank of 35-12 on July-Aug 2021, reaching 12 in Sep 2021. However, by the time of writing this post, LUNA's market cap rank is about 11, and its value is $15,315,016,747 Billion. Moreover, its liquidity score is 68% above the market's average score, making it relatively easier to sell in bear markets

You are saying that Terra (LUNA) is the best cryptocurrency to invest in?

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