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Terra Luna Vs. Atom (Compared)

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This article was written before the Luna Crash.

Terra (LUNA) is one of the most exciting projects in the world of crypto today. It provides a robust platform for most stablecoins in the market. You may wonder, how it measures up against Atom from the Cosmos ecosystem? 

Let’s find out more below. We’ll briefly look at its features and some key differences between these two coins.  

What is Terra (LUNA)?

Terra is an open-source blockchain protocol that provides an excellent platform for algorithmic stablecoins.

Using open market arbitrage techniques and a decentralized voting system, Terra creates stablecoins that can track any fiat currency.

Besides that, the Terra blockchain is excellent for users who want to save, stake, trade, and exchange Terra stablecoins.

Some excellent examples of stablecoins on the Terra blockchain include:

  • TerraUSD or UST, which tracks the price of the U.S. dollar
  • TerraSDR or SDT, which tracks the price of the IMF’s SDR

LUNA, on the other hand, is Terra’s native staking token. Its primary purpose is to absorb Terra’s volatility, mint new Terra and governance. In other words, you can use LUNA in three ways:

  • When you stake LUNA, you help validate transactions on the Terra network and earn rewards from transaction fees. 
  • You also use LUNA to vote on new ideas on the Terra blockchain, and 
  • You burn LUNA to mine new Terra.

Read our comprehensive guide on the difference between Luna and TerraUSD.

What is Atom?

Atom is the original token for Cosmos. The Atom token secures the Cosmos blockchain from 51% attacks on its validation authority. Besides that:

  • Rewards for staking and transaction fees are distributed across the Cosmos hub using the ATOM token
  • Staked ATOM can also secure other blockchains in the Cosmos Ecosystem

Cosmos is an ecosystem that connects independent blockchains using decentralized applications and an Inter-Blockchain Communication (IBC) Protocol. Essentially, Cosmos is the internet of blockchains.

With Cosmos, you can:

  • Build a community, organize and allocate resources to all its members
  • Create a social network that shares information freely without censorship and filtering that’s common with centralized platforms
  • Develop exchanges and marketplaces for permissionless trade worldwide
  • Create unique collectibles and character upgrades that gamers can monetize outside of approval and apps store fees

Learn more about the differences between Luna and Algorand.

Terra (LUNA) vs. Cosmos (ATOM): Differences

These are the key features of the Terra (LUNA) coin are:

  • Terra relies heavily on stablecoins pegged to fiat currencies to power its blockchain network
  • It uses an automated algorithm to manage the supply of Terra and Luna in the market
  • Terra has provides stability in coin prices pegged to fiat currencies
  • Allows participants to trade LUNA coins with stable coins for rewards

Cosmos (ATOM) has the following features:

  • Cosmos offers interchain transactions for most cryptocurrencies
  • It attempts to solve the cryptocurrency trilemma facing many coins
  • ATOM pushes for greater adoption of blockchain technology
  • ATOM wants to make it easier for developers to build systems around the blockchain network

Terra (LUNA) vs Cosmos (ATOM): Analysis

ComparisonTerra (LUNA)Cosmos (ATOM)
Launch date20192016
FoundersDaniel Shin and Do KwonJae Kwon,Ethan Buchiman and Zarko Milosevic
Blockchain protocolTerra network IBC (Inter-Blockchain Communications) Protocol
Token typeNativeNative
Use caseServes as a controlling tool for Terra participants and it is fiat – fixed stable coin.Facilitates communication amongst other blockchain networks
Coins in supply749.65M LUNA286,370,297 ATOM
Market Cap$39.16B$8,797,146,935.48
Consensus MethodDPos (Delegated Proof of Stake)PoS (Proof of Stake)

Frequently Asked Questions

What Problems Does Luna Solve?

Terra (LUNA) provides an ideal platform to create stablecoins that track the price of any fiat currency. Besides that, Terra is a smart contract platform that powers many payment gateways within the blockchain network.

Using a single blockchain layer, Terra attempts to eliminate the need for credit card networks, banks, and payment processors.

What problems does Atom solve?

Atom’s primary role is to solve the cryptocurrency trilemma of scalability, security, and decentralization.

It also interconnects blockchains using the developer-friendly Inter-Blockchain communication protocol.

Using the Cosmos Hub, ATOM offers shared security to all the blockchains in its network, interchain exchange, and bridges to both Ethereum and Bitcoin.

Is Terra Built On Atom?

The Terra blockchain is built on Cosmos(Atom) and runs on the Tendermint BFT consensus mechanism.

The Cosmos framework also provides an open chain that can create and develop custom Web3 applications, Non-Fungible Tokens (NFTs), and Decentralized Finance (DeFi) applications. 

Learn more: Terra Luna Vs. Fantom

What Crypto Is Built On Cosmos?

Some of the cryptocurrencies built on the Cosmos ecosystem are Cosmos Hub (ATOM), Terra (LUNA), and Binance Coin (BNB). 

Is Cosmos Like Ethereum?

Cosmos isn’t similar to Ethereum. Although both seek to solve the blockchain trilemma, they work differently.

The main difference between the two is that Ethereum wants to be the world’s largest computer while Cosmos targets the Internet of blockchains. 

Functionality 

Ethereum doesn’t offer developers a framework or infrastructure they can use to launch blockchains on their network. Cosmos does. It provides developers with an avenue to easily create or build other blockchains, applications, or systems. 

Interoperability

The Cosmos network allows all the blockchains under its ecosystem to communicate with one another using the IBC. IBC helps balance the value of stablecoins and exchange rates on fiat-pegged cryptocurrencies.

Competition

Cosmos and Ethereum rarely compete, but some coins within the Cosmos network competes with Ethereum.

An excellent example is the Binance Smart Chain which processes more transactions per second than Ethereum and offers lower fees per transaction..

Consensus Mechanism

Ethereum, at the time of this writing, still depends on the Proof of Work (PoW) mechanism to generate new blocks.

The Cosmos network uses the Proof of Stake (PoS) and the Tendermint BFT mechanisms. Cryptocurrencies that use Proof of Work need more gas fees than those using the PoS consensus. They also consume more energy.

Learn more: Is Terra Luna Proof Of Stake?

Final Verdict

There is plenty of interdependence between Atom and Terra. Since Terra is built on the Cosmos ecosystem, it depends on Cosmos and Atom to stand. For this reason, Atom is better.

Besides that, it attempts to solve the cryptocurrency trilemma uniquely,  a problem that Terra hasn’t yet addressed.