Terra Classic (LUNC), formerly known as Terra (LUNA until May 2022), is the original native cryptocurrency of the Terra blockchain. It was designed for staking and governance within the Terra ecosystem. The name changed to Terra Classic following the collapse of the Terra stablecoin (UST) and network fork in May 2022 to distinguish it from the new Terra blockchain (LUNA 2.0). Terra Classic aims to maintain the operation of the pre-fork network and assets.
What is Terra Classic (LUNC) and how does it differ from the original Terra blockchain?
Terra Classic (LUNC) refers to the original Terra blockchain and its native token, known as LUNA before a significant network crisis in May 2022. Following this event, a new blockchain called Terra (LUNA 2.0) was created, and the original was renamed Terra Classic. Terra Classic differs from the new Terra in that it contains the historical data and operations up to the point of the crisis, while the new Terra blockchain started fresh, aiming to move past the collapse with a reset token economy but without the algorithmic stablecoin that contributed to the original chain's downfall.
Can you explain the role of fiat-pegged stablecoins in the Terra Classic ecosystem?
In the Terra Classic ecosystem, fiat-pegged stablecoins, such as TerraUSD (UST), played a critical role as decentralized, algorithmic stablecoins designed to maintain a stable value equivalent to fiat currencies. They aimed to combine the price stability of fiat with the decentralization of cryptocurrencies to enable stable digital transactions and serve as a foundation for DeFi applications within the Terra ecosystem.
What instigated the Terra Classic (LUNC) and Terra (LUNA) split?
The Terra Classic (LUNC) and Terra (LUNA) split was instigated following a significant de-pegging event of the TerraUSD (UST) stablecoin from its $1 target value. The devaluation sparked a downward spiral due to the algorithmic mechanism designed to stabilize UST's price through LUNC. This resulted in hyperinflation of LUNC and a loss of confidence, leading the Terra community to propose and adopt a new blockchain with a new version of the token, LUNA, in an effort to revive the ecosystem, abandoning the original Terra Classic chain and its tokens, LUNC and UST.
Who are the founders of Terra Classic and what are their backgrounds?
Terra Classic, the original blockchain of the Terra ecosystem, was founded by Do Kwon and Daniel Shin. Do Kwon is a software engineer with a background in computer science from Stanford University, and he has experience in building startups and working in the cryptocurrency space. Daniel Shin is an entrepreneur with a significant background in e-commerce and business startups, particularly as the co-founder of Ticket Monster, a popular South Korean e-commerce platform, and as the founder of the startup studio Fast Track Asia.
What unique features does Terra Classic offer compared to other blockchain platforms?
Terra Classic offers a unique dual-token system comprising of Luna Classic (LUNC) and Terra (UST) designed to stabilize the price of its stablecoins. It leverages seigniorage and algorithmic mechanisms to maintain the peg of UST to various fiat currencies. The platform also prioritizes usability with its integration into the CHAI e-commerce wallet and Mirror Protocol for synthetics trading, aiming to create a stable and scalable payments system.
How are transactions verified and secured on the Terra Classic blockchain?
Transactions on the Terra Classic blockchain are secured and verified through a process called Tendermint consensus, which is a variation of Proof of Stake. Validators, who are participants with a stake in the network's native token, LUNA Classic, take turns proposing and voting on the next block. A transaction is considered verified and secured once it is included in a block that receives more than 2/3 of the voting power from these validators.
What happened to the UST stablecoin and how did it affect the Terra Classic network?
The UST stablecoin, which was algorithmically pegged to the US dollar, lost its peg in May 2022 due to a combination of market volatility and massive withdrawals. This de-pegging triggered a death spiral, causing UST to lose value rapidly. The mechanics designed to stabilize UST by burning and minting Terra (LUNA) exacerbated the issue, inflating LUNA's supply and driving its price down drastically. This incident collapsed investor confidence and caused significant losses, leading to the near-complete devaluation of both UST and LUNA, and ultimately rendering the Terra Classic network unsustainable in its original form.
How did the introduction of the Columbus-5 upgrade affect the Terra Classic ecosystem?
The introduction of the Columbus-5 upgrade to the Terra Classic ecosystem brought significant changes, including improvements to gas efficiency, enabling inter-blockchain communication with the Cosmos IBC, and upgrading the staking module. It also created a deflationary mechanism for LUNA by burning all seigniorage, and introduced the 'burn tax' for transactions. This upgrade was aimed at enhancing overall network performance, fostering a sustainable economic model, and expanding the utility of LUNA.
What is the significance of the term 'Classic' in Terra Classic, and how does it relate to Ethereum Classic?
The term 'Classic' in Terra Classic signifies that it is the original version of the Terra blockchain, which remained after a hard fork following a major collapse in its ecosystem. Similarly, Ethereum Classic is the original version of the Ethereum blockchain following a hard fork due to a significant divide in the community after the DAO hack. In both cases, 'Classic' refers to the unchanged, original network that continued to exist alongside a new fork intended to address the respective crises.
