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Terra Luna Vs. Cosmos (What’s The Difference)

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This article was written before the Luna Crash.

Terra is a decentralized finance platform that uses a price-stability algorithm to support the value of many stablecoins in the market right now.

You may know them from the stablecoin TerraUSD or UST, which is pegged to the USD. Cosmos is also a blockchain that supports interoperability between different blockchains. So what’s so different about these two assets?

Let’s find out more below.

What is Terra(LUNA)?

Terra is a public blockchain with an excellent platform for algorithmic decentralized stablecoins. These stablecoins track the prices of fiat currency and make DeFi accessible to the general public.

Terra has its foundations in the Cosmos and Tendermint BFT ecosystems. You can stake, spend, save or trade Terra stablecoins.

LUNA is Terra’s native staking token, and its key purpose is to absorb the market volatility of Terra. It also has three other functions: To validate transactions, mint new Terra, and give voting rights to holders.

LUNA has a great community of developers and users who participate in shaping how the future of Terra in DeFi will look. LUNA is a prominent coin in decentralized finance and supports smart contracts for different uses. 

Terra offers a cross-chain protocol that works well with other huge blockchains in the industry.

As a trader, you can participate as a validator on the Terra blockchain to make it more secure. As a builder, you can attach your new applications to the Terra source code to enjoy and contribute to the blockchain. 

What is Cosmos?

Cosmos is the internet of blockchains, and one of the primary goals of its ecosystems is to connect all the blockchains in the crypto world. 

Cosmos is a fast-growing ecosystem of interconnected, autonomous blockchains. It uses the Inter-Blockchain Communication (IBC) protocol that houses developer-friendly application components.

Binance Chain, Terra,, and Cosmos Hub are among the more than 263 apps and services in the Cosmos network. This ecosystem manages approximately $173 billion in digital assets.

Cosmos values collaboration and creativity over rivalry. The ecosystem also favors status quo, interoperability, and autonomy over silos and monopolies.

Rather than relying on centralized servers to exchange, store, and secure value, the Cosmos ecosystem ensures data is transferred, stored, and secured between partners.

Through Cosmos, developers can create completely self-contained, interconnected blockchains with specialized applications.

Cosmos has it’s own native token, ATOM. Just like LUNA for Terra, Atom serves three unique functions for Cosmos:

  • By staking ATOM, you help secure the Cosmos blockchain. Staking ATOM helps validate transactions within Cosmos and helps prevent 51% attacks and other hacks from succeeding within the ecosystem
  • As you stake ATOM, you earn rewards. As a validator, you earn rewards in ATOM or other crypto assets for securing Cosmos
  • ATOM gives you the right to vote on proposals made on the Cosmos ecosystem. You help determine the direction and future of the Cosmos blockchain.

Learn more: Terra Luna Vs. Atom

Terra (LUNA) Vs. Cosmos: Differences

Terra has the following features:

  • Terra blockchain has its fundamentals built on top of Cosmos SDK and Tendermint BFT consensus
  • It has partnerships with payment systems to facilitate payments on various platforms
  • Terra provides an excellent platform for stablecoins that can track any fiat currency

Features of Cosmos are:

  • It is home to other blockchains or, a blockchain of blockchains
  • Cosmos provides a framework for other blockchains to thrive on

Frequently Asked Questions

What Is The Relation Between Luna And Cosmos

Terra (LUNA) is a blockchain built on the Cosmos ecosystem. The Cosmos SDK uses the Tendermint BFT mechanism to achieve consensus.

The LUNA token provides governance and security and mints new Terra within its blockchain hosted by Cosmos ecosystem.

Cosmos, on the other hand, serve as an ecosystem of blockchains. Atom is a significant token in the Cosmos network.

When interacting with Cosmos as an ecosystem, you should understand that there are many tokens or coins besides ATOM. 

Is Terra Luna Built On Cosmos?

Yes. Terra (LUNA) is part of the Terra network and is one of the blockchains built on the Cosmos ecosystem. LUNA is the native coin for Terra.

Is Cosmos A Good Investment?

Cosmos is an excellent investment if you want to stake or trade ATOM. It’s also an outstanding platform where you can build your own blockchain, create your own tokens and use them to solve real-world problems.

Cosmos shows promising signs for long-term investments. Most Cosmos-based blockchains offer next-level solutions by solving the crypto trilemma of scalability, sustainability, and security.

Cosmos provides you with bridges that connect and support interaction between two or more blockchains. Also, you can enjoy faster TPS and lower gas fees. It also encourages pegging to fiat currencies. For example, LUNA continues to test resistance and rising in value over the past year. 

The Cosmos ecosystem is a host of coins that hold strong fundamentals and utility to ensure investors of growth and future value.

Who Owns Cosmos Blockchain?

The co-founders of Cosmos were Zarko Milosevic, Jae Kwon, and Ethan Buchman. The three were also Tendermint co-founders. 

After forming Tendermint Inc. in 2014, Jae Kwon was the first to use Byzantine Fault Tolerance (BFT) research in a “Proof of Stake” (PoS) public blockchain setup. Tendermint plays a critical role in ensuring the Cosmos ecosystem is safe and reliable to date. 

The project aims to solve the speed, scalability, and environmental concerns that Bitcoin and Ethereum’s “Proof of Work” systems have caused.

Final Verdict

Both Cosmos and Terra provide excellent opportunities for developers and users of blockchains.

Although Cosmos houses Terra, it also houses other blockchains. Essentially, Terra and Cosmos serve two different purposes. None is better than the other.