LUNA coin is the native token of the Terra blockchain and is just one of the many stablecoins that have been introduced by the Terra protocol. The Terra blockchain is a decentralized finance (DeFi) blockchain network that focuses on the price stability of its stablecoins by employing special algorithms that make the coins analogous to each other. It is because of this that Terra is now one of the top blockchain networks globally.
Before you open a LUNA wallet, it is first important that you have an understanding of how the Terra blockchain works. This is because your wallet will be used for much more than simply storing your LUNA. Terra employs a series of innovative DeFi protocols, algorithms, and smart contracts to create an ecosystem of price-stable stablecoins.
Unlike most of the stablecoins in the market which are centralized and tethered to the US dollar, LUNA and other Terra stablecoins are decentralized. If the demand for one of the stablecoins goes up, LUNA coins are burnt to create a balance. LUNA plays a central role in ensuring that all the other Terra stablecoins remain pegged to their respective financial assets.
How can you benefit from LUNA?
As we have seen, LUNA is primarily responsible for ensuring the Terra stablecoins do not experience price volatility. For instance, if the demand for Terra’s UST coin goes up, LUNA will be burnt to mint UST coins. This will cause the value of LUNA to go up, which ultimately benefits LUNA holders. If the demand for UST coins goes down, LUNA holders are given an opportunity to mint more UST coins.
In addition, the use of the LUNA coin as the native token of the Terra ecosystem means LUNA stakers can earn rewards from transaction fees and taxes collected on the Terra blockchain. You can read more on the Loop Homepage about how LUNA staking works and the amazing rewards you can get.
The Terra station hot wallet
Terraform Labs created the Terra station hot wallet to serve as a source of information for anything related to your LUNA and Terra account—including your tokens and a record of your transactions. It has a dashboard that displays important LUNA information such as its price, and the staking return and helps users determine what they will do with their LUNA coins.
The Terra station app enables users to stake their LUNA through the various validators listed on the app for amazing rewards which can come in form of airdrops or other stablecoins. Before you select a validator, you can view their profiles to obtain helpful and potentially crucial information about them. You can decide to delegate your entire LUNA stake to one validator or spread it evenly across a number of validators.
The LUNA wallet
The Terra station app has a wallet part where you can see the number of LUNA tokens you hold as well as various other Terra stablecoins. The wallet also allows you to transfer or withdraw your LUNA holding (or any other stablecoins you own). In addition, the TerraSwap feature enables users to swap their stablecoins or tokens for other tokens.