This article was written before the Luna Crash.
Cardano and Terra Luna are among the leading contenders for the title of ‘Ethereum killers’.
Cardano has been at it way longer than Terra, but the latter has seen massive growth in such a short time that it is overshadowing Cardano.
This guide will consider the differences between these two projects to understand what makes them unique. We aim to uncover how the two are related, how to best invest in either, and some of the applications of their native cryptocurrency assets.
What is Terra Luna?
Terra Luna is based on the Cosmos SDK mainly used to create and maintain algorithmic stablecoins.
Its mainnet was launched in April of 2019, and it saw the launch of the first batch of stablecoins, including the US Dollar-pegged TerraUSD (UST) and the South Korean Won-pegged TerraKRW.
Terra is a Defi protocol that supports smart contracts. So far, the network has seen close to 100 decentralized applications launched on its infrastructure, taking advantage of the DeFi-friendly ecosystem.
At the core of the Terra ecosystem is the native cryptocurrency LUNA, a governance token with additional applications.
It can also be used as the price adjusting lever for the algorithmic stablecoins issued on Terra.
It absorbs stablecoin price volatility and lets Terra holders earn staking rewards.
What is Cardano?
Cardano is an open-source and decentralized blockchain network created by former Ethereum co-creator Charles Hoskinson. Its initial design was envisioned in 2015, but the network was officially launched in 2017.
The blockchain operates in two architectural layers: Cardano’s Settlement Layer (CSL) and Cardano’s Computational Layer (CCL).
The CSL is the value transfer layer to facilitate token exchange between wallets. And the CCL maintains the chain’s security and is useful in hosting the smart contracts that run on Carano.
Cardano is more of a general-purpose smart contract platform similar to Ethereum, which means that any decentralized app (dApp) can be designed and launched on the network.
ADA is Cardano’s platform token named after 19th-century mathematician Ada Lovelace, the “world’s first computer programmer.”
Cardano’s ADA token serves multiple purposes, including value transfer, staking, and paying transaction fees.
There are plans to use the token for governance purposes once the network fully transitions to a community-run project.
Terra Luna Vs. Cardano (ADA): Key Takeaways
Terra Luna has the following unique features:
- It is a network of Defi-centric dApps;
- It has two native crypto-assets – LUNA and Terra-based stablecoins;
- Its stablecoins are algorithmically minted and burned instead of being backed by reserves.
On the other hand, Cardano has the following main features:
- It has two operational architectural layers – CSL and CCL;
- It can be used to host dApps, even though that feature is not fully operational;
- It is one of the leading contenders for the ‘Ethereum Killer’ title.
Here’s a brief rundown of the main differences:
Frequently Asked Questions
What Is The Relation Between Luna And Cardano?
Terra LUNA and Cardano are both open-source decentralized blockchain protocols. They may serve diverse roles, but they have several similarities:
- They are both decentralized;
- Both are third-generation blockchains, with the permissionless Bitcoin and Ethereum representing the first and second-generation networks, respectively;
- Terra Luna and Cardano can support decentralized apps, and even though Cardano’s feature is still under development, it is designed to host smart contracts;
- The two networks run on a Delegated Proof of Stake (DPoS) consensus mechanism where native asset stakeholders delegate their roles to node operators.
Luna Or Ada: Which Is More Trusted?
Cardano’s ADA coin has been in existence far longer than Terra’s LUNA. Therefore, it’s more stable and reliable for its investors.
Terra Luna is a more recent asset whose staying power is yet to be proven extensively.
What Are The Applications Of Ada?
Cardano’s ADA coin can be used for the following purposes:
- Value transfer on the Cardano blockchain’s CSL layer.
- Fee payment for transactions and dApp deployment.
- Staking on the DPoS-based Cardano network for passive income.
- Speculation by traders and investors alike.
What Are The Applications Of Luna?
Terra’s LUNA plays the following roles:
- A utility token to pay for transaction fees on the Terra network.
- A governance token for stakeholders to vote on key network decisions.
- A staking token for holders to earn passive income and delegate their transaction validation roles.
- A lever for regulating the price of Terra-based algorithmic stablecoins.
The Best Way To Invest In Cardano
Most cryptocurrencies, including Cardano’s ADA, are available on crypto trading platforms. Centralized exchanges are the most common and in the case of ADA, these are some of the leading exchanges to buy the asset:
The Best Way To Invest In Terra
Terra has become popular in a very short time, and therefore, there are fewer exchanges that support it, but a majority of the larger ones do. These include:
- Huobi Global
- TerraSwap (DEX)
The last option for Terraswap is interesting because the platform is decentralized. It is ideal for those that would like to avoid the cumbersome KYC provisions available on centralized exchanges (CEXes). DEXes are more convenient, often cheaper, and faster.
It might be hard to choose between Terra Luna and Cardano depending on your goals but hopefully, this guide has given a few pointers to make the decision easier.
Terra is a great platform for launching DeFi-based dApps while Cardano is a generalized smart contract platform. They can both be used for staking, vault transfer, and speculation.