This article was written before the Luna Crash.
Terra’s mission is to popularize cryptocurrency payments by duplicating the current traditional financial industry on the blockchain and enabling a parallel payment ecosystem. Powering that ecosystem will be a slew of stablecoins.
This guide focuses on Terra’s infrastructure and features of the financial protocol. We will consider whether Terra can rival Ethereum, and briefly discuss a few other blockchain projects that compete with Terra.
Is Terra A Smart Contract Platform?
Yes, Terra Luna is a smart contract platform. Created in 2018 and launched in 2019, Terra represents a new generation of blockchains focused on decentralized finance (Defi) applications.
A smart contract is an autonomously executable piece of code that is run on set instructions.
Essentially, when the preset conditions are realized, the contract executes itself. Most blockchains with smart contract capability, such as Ethereum, host a general selection of dApps (decentralized applications).
However, Terra has focused on providing a launch platform for finance-related applications. These include:
- Money markets
- Real estate
- Automated market makers (AMMs)
The biggest challenge with untethered digital assets such as Bitcoin has been their volatile price.
On the other hand, stablecoins provide a good balance between digital asset properties and having the much-desired stable value to be used as money.
Taking a step further, Terra Luna enabled the smart contract functionality to allow other blockchain projects to take advantage of the financial fluidity that the protocol was developing.
As a blockchain network, here are some of Terra’s benefits that make it attractive to dApp and Defi app developers:
- Algorithmic stablecoins – the network, unlike its direct competitors, uses ‘in-house’ stablecoins that make it more convenient to transfer value between dApp users and even for the dApp owners to pay for gas fees;
- Cosmos IBC protocol – the Terra Luna network is created using the Cosmos SDK, making it inherently compatible with all networks within the Inter-Blockchain Communication protocol, which enables cross-chain compatibility;
- Fast throughput – Terra network uses the Delegated Proof of Stake (DPoS) consensus mechanism that provides for fast transaction confirmation times.
Does Luna Have Smart Contracts?
Yes, the Terra Luna network hosts several different smart contracts, all within the vast decentralized finance (Defi) space.
As of this writing, there are over 90 projects built on top of Terra, covering sectors such as savings, betting, investments, real estate, NFT, lottery, metaverse, payments, etc.
Also read: Does Cosmos Have Smart Contracts?
What Is Terra Luna Used For?
Terra’s LUNA token serves four main roles within the Terra ecosystem. They are:
Payment method – the LUNA token can be used for value transfer, including paying transaction fees and gas fees for running smart contracts;
Stablecoin value stabilization – LUNA plays an important role in the maintenance of the fiat-currency pegged stablecoins launched on the platform. In essence, the coin absorbs the discrepancies between the tokens and their respective fiat counterparts;
Governance – only LUNA holders, can make improvement proposals and vote on their or other community members’ proposals;
Staking – LUNA stakeholders can receive passive income from their delegation activities, while validators need to stake LUNA to be accepted as transaction verification delegates.
Learn more: Terra Luna Vs. Atom
What Are The Gas Fees On Terra?
Gas, as used in blockchain, is the cost of computing a transaction on a smart contract-enabled platform such as Terra, Ethereum, Solana, Cardano, etc.
These fees are attached to a transaction by the sender or executor and are remitted to transaction validators as a reward for their efforts.
Gas fees on Terra are implemented a little differently than in most others. Here’s how:
- Transaction validators are allowed to set their own minimum gas fees;
- Unspent gas fees within a transaction are non-refundable to the sender;
- Gas fees are not used to determine transaction processing order. Rather Terra uses a first-come-first-served approach.
Is Terra Luna A Defi?
Terra Luna is not a decentralized finance (Defi) application itself. Instead, it is a platform on top of which Defi and other decentralized applications (dApps) can be deployed and run.
So far, there are more than 90 blockchain apps built on the nascent ecosystem, some of which are already live while most of them are under development.
Read more: Terra Luna Vs. Fantom
Which Coins Are Smart Contracts?
Coins cannot be smart contracts, but their host networks can since they can be deployed on smart contract-enabled protocols such as Ethereum. Some notable smart contracts include:
- Shiba Inu – (ERC-20 token based on Ethereum);
- Anchor Protocol – Terra network-hosted;
- ChainLink – hosted on Ethereum;
- PanCakeSwap – hosted on BNB Chain; and
- Tether – a leading stablecoin hosted on Ethereum, Solana, Algorand, and BNB Chain.
Which Crypto Platforms Have Smart Contracts?
The leading smart contract platform is currently Ethereum, a project that was launched in 2015 following three years of development.
It became the first project to introduce the novel smart contract idea, but since then, it has seen several competitors come up, including:
- EOS; and
- BNB Chain, among others.
Does Cardano Do Smart Contracts?
Cardano doesn’t do smart contracts at the moment. It’s currently undergoing the Goguen era, which is the third phase in a five-stage network upgrade. After this era, Cardano will enable support for smart contracts.
Does Matic Have Smart Contracts?
Polygon (formerly named MATIC) is a layer-2 scalability solution built on top of the popular Ethereum network.
All smart contracts created on Ethereum can be modified to run on the Polygon layer, which offers faster network speeds. So far, there are over 1,400 dApps hosted on Ethereum that are running on the Polygon layer.
Learn more: Is Terra Layer 1?
Does Solana Have Smart Contracts?
Yes, Solana has support for smart contracts as it’s one of the leading competitors of Ethereum. Its ecosystem currently includes decentralized exchanges (DEXes), NFT marketplaces, automated market makers (AMM), blockchain exports, oracles, and many more.
Terra Luna may have a focus on algorithmically-minted stablecoins, but its smart contract features have catapulted the network to become a notable contender for the leading dApp platform position.
The network has native stablecoins in its ecosystem, something that its rivals do not have. Could it be enough to make it the market leader? Only time will tell.