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Is Terra LUNA A Layer 1 (11 Short Answers)

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This article was written before the Luna Crash.

Built on Tendermint, Terra is an independent PoS blockchain. This project uses encryption unburdened by overhead data, allowing for hyper-fast transmission speeds and more efficient transactions.

Find out more about how Terra LUNA is changing the cryptocurrency landscape and rising to the top of the list for forward-thinking investors who want ground floor representation in the Terra universe. 

Is Terra LUNA A Layer 1 Blockchain? 

Yes! Terra LUNA is a layer 1 blockchain. It uses a Proof of Stake mechanism for validation. Therefore, LUNA doesn’t require mining.

Layer 1 blockchains address the scalability issue that has haunted earlier networks. They do this by either using a more efficient consensus mechanism (e.g., PoS instead of PoW) or sharding.

To put it a bit more technically, “scaling” here means achieving a faster throughput rate as measured by transactions per second.

Layer one blockchains required decentralized, secure, and scalable consensus protocols. The two most common ones are:

  • Proof of Work, or PoW, which engages miners to provide solutions for cryptographic algorithms. Unfortunately, it’s slow and drains resources.
  • Proof of Stake, or PoS, uses a distributed consensus where users validate block transactions, backing them with their stakes. PoS has a higher transaction speed, but PoW offers more security. 

Sharding breaks up the entire network into smaller sections called shards. This creates multiple interconnected blockchains which are more manageable. Moreover, not all nodes have to handle transactions to ensure network integrity. Processed in parallel, shards free up capacity for other transactions.

Layer 1 cryptocurrencies include Ethereum (ETH), Binance Smart Chain (BNB), Cardano (ADA), Solana (SOL), and Terra (LUNA), to name just a few.

What Is Terra LUNA?

Terra uses fiat-pegged stablecoins to power payment systems. Founded in 2018 by Do Kwon and Daniel Shin, the project focuses on price stability to fuel rapid blockchain technology adoption.

Terra uses its native token, LUNA, to stabilize prices for its stablecoin, UST, providing fast, affordable transactions. Holders vote on essential changes to the Terra network launched in 2020.

UST uses LUNA as a reserve asset. So, to mint one TerraUSD, regulators burn $1 worth of LUNA.

Also read: Is ADA a stablecoin?

Is Terra LUNA An Erc20 Token?

In addition to running its own blockchain, Terra LUNA works on Ethereum. It implements a smart contract at the following address:


What Is ERC20?

The ERC20 protocol standard regulates trades made on the Ethereum network. ERC stands for Ethereum Request for Comments, and 20 serves as a unique ID number.

You can use ERC20 tokens only on Ethereum, a decentralized, open-source platform hosting smart contracts as well as decentralized applications (dAPPS).

Is Terra LUNA Built On Ethereum?

No Terra isn’t built on Ethereum. It’s a blockchain network that uses LUNA as its native cryptocurrency. LUNA-backed TerraUSD is the network’s stablecoin. 

However, there’s an ERC-20-compatible version of LUNA that is supported on Ethereum.

Are LUNA And Terra The Same?

No, but they’re integrally related. Terra is a blockchain network, and LUNA is the native cryptocurrency.

What Is Terra Backed By?

Terra supplies stable programmable money for blockchain and field economies. It’s backed by LUNA, a native cryptocurrency that contracts and expands the supply of stablecoins to maintain them at the value of fiat currency.

What Makes Terra LUNA Special?

Terra (LUNA) is more than just a defi blockchain protocol. It relies on several innovative concepts such as Oracle systems, stablecoins, and smart contracts to create programmable money for use in the digital world. 

Is Terra Decentralized? 

Yes, Terra is a decentralized cryptocurrency. It works as a blockchain protocol with unique theories proposed by its founders. Creating programmable money puts power into the hands of the users.

Terra experienced a meteoric rise in 2021 and doesn’t look to slow down in 2022 or beyond.

As of early March 2022, Terra LUNA exceeds the total locked value of Ether at over $30 billion. With 226,325 LUNA stakers, Terra is the second-highest staked crypto.

According to Terra’s white paper, Terra uses proof of stake validation which engages users to verify transactions based on the number of coins held. Proof of stake supporters say it is significantly less energy-intensive than other models and has a smaller environmental impact.

The decentralized nature of the coin builds trust among users and helps users create a decentralized financial network based solely on digital assets. In addition, DeFi models aim to end centralized currencies’ control over investors and consumers. 

Learn more about how Luna uses PoS to become eco-friendly.

Is Terra LUNA Deflationary?

The native cryptocurrency LUNA provides stability to the Terra stablecoin. There is a cap on the maximum amount of LUNA that can exist at one time. Terra released 1 billion LUNA at the beginning of the project and regularly burns LUNA to maintain that cap.

Who Owns Terra Crypto?

Do Kwon owns Terra crypto. Kwon cofounded Terra to leverage blockchain technology to make a more efficient payment system. The self-named stablecoin attracted 40 million users when it launched in January 2018.

Is LUNA A Good Crypto?

So far, LUNA has done well in the crypto market. Current trends suggest that Terra can outpace other cryptocurrencies in 2022 and beyond.

Most of its projects are decentralized finance, but the masters behind Terra also imagine other metaverse projects. With a solid whitepaper, strong leadership, and a growing list of enthusiasts, LUNA shows incredible potential for future growth.

Can You Stake Terra LUNA?

Yes, Terra LUNA works on a proof of stake configuration. In addition, token holders who pledge their coins receive additional rewards for leveling out volatility.

Final Thoughts

Terra is a layer 1 blockchain designed for speedy transactions. By staking the Terra platform to its native cryptocurrency, Terra’s owners maintain control over a finite inventory of 1 billion stable coins. 

The new player’s innovative approach and other ideas make Terra a unique and valuable asset for many crypto holders.