TL;DR
The Terra blockchain protocol is an open-source, decentralized blockchain platform that hosts a vibrant community of decentralized applications (dApps). The Terra blockchain offers one of the fastest defi experiences in existence, thanks to a proof-of-stake consensus and cutting-edge technologies such as Mantlemint and Terra Station.
Luna is the Terra protocol’s native asset. Luna is used for mining and governance. Luna can be staked in exchange for rewards from validators, who record and verify transactions on the blockchain and receive compensation from transaction fees.
Introduction
On May 25th, 2022, Terra Classic users passed governance proposal 1623, which outlined the genesis of a new Terra chain. This proposal also described a genesis distribution of Luna which would be airdropped to users of the Terra Classic chain based on pre-depeg and post-depeg snapshots. Users can find their airdropped Luna by viewing the same wallet address that was present during either snapshot and switching their Terra Station network to the phoenix-1 mainnet.
Terra Classic was under attack which prompted the community to react in a way that sparked this new forked chain. On May 27th, 2022 the phoenix-1 Terra mainnet launched, ushering in a new era of development by the Terra community.
What Is LUNA 2.0?
Terra (LUNA) is a public blockchain that emerged from Terra Classic. Terra Classic is home to the stablecoin TerraClassicUSD (UST). This coin experienced a bank run on May which prompted its price to de-peg from the USD. As a result, LUNA was devalued to virtually zero prompting a new chain to develop, Terra from Terra Classic.
Terra Classis launched in April 2018. The goal for Terra Classic was to combine the price stability of fiat currencies with the power and utility of blockchain technology. Terra Classic offered stablecoins pegged to different currencies including the USD, South Korean Won, among others.
Terra (LUNA) continues on the foundation for which Terra Classic built but without the stablecoins. Terra hopes to continue building a decentralized ecosytems with many developers from Terra Classic migrating to Terra to continue building up the blockchain. It hopes to leverage its community dubbed the "LUNAtics" in achieving and surpassing its previous milestone in being the second project with Total Value Locked.
Vesting
Vesting in the crypto sense, is a term used for Luna that cannot be traded and remains locked in an account until a certain date.Terra Classic users have Luna vested in their accounts from the Terra Genesis airdrop. As Luna is locked, the vesting schedule describes how long it will remain locked, when it will be unlocked, and how much will be released once it's unlocked.
Cliffs
Cliffs are the period of time that must pass before Luna can be fully unlocked. Upon the end of the cliff period, a small amount of the vesting Luna will be released every block according to the vesting period.
For example, according to the genesis Luna distribution, Terra Classic wallets that contained less than 10,000 Luna during the pre-depeg snapshot will be airdropped Luna with the following vesting schedule:
30% unlocked at genesis; 70% vested over 2 years with a six-month cliff.
This means that 30% of a user’s airdropped Luna will be unlocked and can be freely traded at the start of the new Terra blockchain. 70% of the airdropped Luna will be locked for six months without being released, this is also know as the "cliff".
After six months, a small portion of the remaining 70% of Luna will be released every block for 2 years. After 2 years, all the airdropped Luna will have been released, and the vesting will be complete.
Example: A user had less than 10k Luna in their Terra Classic wallet during the pre-depeg snapshot. 1000 Luna total is airdropped to their wallet.
300 Luna will be unlocked and able to be freely traded at the start of the new Terra chain.
No more Luna will be unlocked until six months have passed (the cliff).
After six months, the remaining 700 Luna will begin to unlock every block over a 2-year period at a rate of .96 Luna per day (700 Luna ÷ 730 days).
Luna that is in the vesting state can still be delegated, redeleagated, or undelegated from validators.
To learn how to view vesting Luna in your wallet, check out Terra's guide the Terra Station vesting guide.
To learn more about vesting, visit the How vesting works.
Validators
Validators are the miners of the Terra blockchain. The Terra blockchain is secured by them, and their accuracy is ensured by them. Each Terra transaction is verified by a program known as a full node run by the Validators.
In exchange for stake rewards from transaction fees, validators propose and vote on blocks. Each new block is added to the chain. Users can stake their Luna with validators in exchange for stake rewards. Additionally, validators play a key role in Terra protocol governance.
For more information on validators, visit their Validator FAQ.
Consensus
The Terra blockchain is a proof-of-stake blockchain, powered by the Cosmos SDK and secured by a system of verification called the Tendermint consensus.
The following process explains how Tendermint consensus works. For more information on the Tendermint consensus, visit their official Tendermint documentation.
A validator called a proposer is chosen to submit a new block of transactions.
Validators vote in two rounds on whether they accept or reject the proposed block. If a block is rejected, a new proposer is selected and the process starts again.
If accepted, the block is signed and added to the chain.
The transaction fees from the block are distributed as staking rewards to validators and delegators. Proposers get rewarded extra for their participation.
The process is repeated, adding new blocks of transactions to the chain. In addition to a copy of all transactions made on the network, each validator compares it to the proposed block of transactions before voting. It is impossible for any false block to be accepted in consensus voting as multiple independent validators take part. Consequently, validators protect the integrity of the Terra blockchain and ensure the validity of every transaction.
Staking
The process of staking Luna involves bonding it to a validator in exhange for stake rewards.
In Terra, consensus is only conducted by the top 130 validators. Validators are ranked based on their stake or the total amount of Luna they have bonded.
Although validators can bond Luna to themselves, they mostly acquire stakes from delegateors. The stakes of validation participants vary, but those with higher stakes are more likely to propose new blocks and earn more rewards.
To learn about staking Luna and earning rewards, visit their Terra Station staking guide
Delegators
Delegators are users who wish to receive rewards from consensus without running a full node. Therefore, any user that stakes any amount of Luna becomes a delegator. Delegators stake their Luna to a validator, adding to a validator’s weight, or total stake. In return, delegators receive a portion of transaction fees as staking rewards.
Phases of Luna
To start receiving rewards, delegators bond their Luna to a validator. The bonding process adds a delegator’s Luna to a validator’s stake, which helps validators to participate in consensus.
Luna exists in the following three phases:
Unbonded: Luna that can be freely traded and is not staked to a validator.
Bonded: Luna that is staked to a validator. Bonded Luna accrues staking rewards. Luna bonded to validators in Terra Station can’t be traded freely.
Unbonding: Luna that is in the process of becoming unbonded from a validator and does not accrue rewards. This process takes 21 days to complete.
Bonding, Staking, and Delegating
Generally, the terms bonding, staking, and delegating can be used interchangeably, as they happen in the same step. A delegator delegates Luna to a validator, the Luna gets bonded to the validator, and the bonded Luna gets added to the validator’s stake.
Delegators can bond Luna to any validator in the active set using the delegate function in Terra Station. Delegators start earning staking rewards the moment they bond or stake to a validator.
Unbonding
Delegators can unbond or unstake their Luna using the undelegate function in Terra Station. The unbonding process takes 21 days to complete. During this period, the unbonding Luna can’t be traded, and no staking rewards accrue.
The 21-day unbonding process helps the long-term stability of the Terra protocol. The unbonding period discourages volatility by locking staked Luna in the system for at least 21 days. In exchange, delegators receive staking rewards, further incentivizing network stability.
Redelegation
Redelegating instantly sends staked Luna from one validator to another. Instead of waiting for the 21-day unstaking period, a user can redelegate their staked Luna at any time using Terra Station’s redelegate function. Validators receiving redelegations are barred from further redelegating any amount of Luna to any validator for 21 days.
Rewards
The Terra protocol incentivizes validators and delegators with staking rewards from gas fees and inflation rewards:
Gas: Compute fees added on to each transaction to avoid spamming. Validators set minimum gas prices and reject transactions that have implied gas prices below this threshold.
Inflation rewards: Every block, new Luna is minted and released to validators and delegators as staking rewards. The rate for the minting of this new Luna is fixed at 7% per year.
For more information on fees, visit their fee page.
At the end of every block, transaction fees and inflation rewards are distributed to each validator and their delegators proportional to their staked amount. Validators can keep a portion of rewards to pay for their services. This portion is called commission. The rest of the rewards are distributed to delegators according to their staked amounts.
Slashing
Running a validator is a big responsibility. Validators must meet strict standards and constantly monitor and participate in the consensus process. Slashing is the penalty for misbehaving validators. When a validator gets slashed, they lose a small portion of their stake as well as a small portion of their delegator’s stake. Slashed validators also get jailed, or excluded, from consensus for a period of time.
Governance
The Terra protocol is a decentralized public blockchain governed by community members. Governance is the democratic process that allows users and validators to make changes to the Terra protocol. Community members submit, vote, and implement proposals.
To learn how to vote with your staked Luna or submit proposals, visit the Terra Station governance guide.
Voting process
Community members vote with their staked Luna. One staked Luna equals one vote. If a user fails to specify a vote, their vote defaults to the validator they are staked to. Validators vote with their entire stake unless specified by delegators. For this reason, it is very important that each delegator votes according to their preferences.
The following is a basic outline of the governance process. Visit the governance module for more details.
Submit Proposal
A user submits a proposal and a two-week deposit period begins.
Deposit Luna
Users deposit Luna as collateral to back the proposal. This period ends once a minimum threshold of 50 Luna is deposited. Deposits are to protect against spam.
Voting Period
The one-week vote period begins. The voting options are:
Yes: In favor.
No: Not in favor.
NoWithVeto: Not in favor, the deposit should be burned.
Abstain: Voter abstains.
Votes are Tallied
The votes are tallied. Proposals pass if they meet three conditions
Quorum is met: at least 40% of all staked Luna must vote.
The total number of NoWithVeto votes is less than 33.4% of the total vote.
The number of Yes votes reaches a 50% majority. If the previous conditions are not met, the proposal is rejected.
Accept Proposals
Accepted proposals get put into effect.
Refund or Burned
Deposits get refunded or burned.
Once accepted, the changes described in a governance proposal are automatically put into effect by the proposal handler. Generic proposals, such as a passed TextProposal, must be reviewed by the Terra team and community, and they must be manually implemented.
LUNA Aridrop
At genesis, Luna will have a supply of 1 billion tokens allocated according to the following distribution:
Community pool: 30%
Controlled by staked governance.
10% earmarked for developers.
Pre-depeg LUNA holders airdrop: 35%
All bonded / unbonding Luna, minus TFL at “Pre-attack” snapshot; staking derivatives included.
For wallets with < 10k Luna: 30% unlocked at genesis; 70% vested over 2 years with 6mnth cliff.
For wallets with < 1M Luna: 1-year cliff, 2-year vesting thereafter.
For wallets with > 1M Luna: 1-year cliff, 4-year vesting thereafter.
Pre-depeg aUST holders airdrop: 10%
500K whale cap - covers up to 99.7% of all holders but only 26.72% of aUST.
30% unlocked at genesis; 70% vested over 2 years thereafter with a 6-month cliff.
Post-attack LUNA holders airdrop: 10%
Staking derivatives are included.
30% unlocked at genesis; 70% vested over 2 years thereafter with 6-month cliff.
Post-attack UST holders airdrop: 15%
30% unlocked at genesis; 70% vested over 2 years thereafter with 6-month cliff.
Definitions:
“Pre-depeg snapshot to be taken at Terra Classic block 7544910 (2022.05.07 22:59:37+08:00)
“Post-depeg snapshot to be taken at Terra Classic block 7790000 (2022.05.27 00:38:08+08:00) All tokens locked or vesting are staked at genesis and must be unbonded to become liquid.
How To Buy LUNA 2.0
You can buy LUNA on Binance.
Log In/ Create An Account
If you haven’t done so already you can create an account with Biannce. Keep in mind Binance is a KYC platform so you need to provide some form of ID. If you have an account already you can just log in.
Search For LUNA
Once logged in click on trade and search for LUNA in the search box.
Select Amount and Buy
Once you find the token select the amount you wan t to purchase and select confirm the order.
Final Thoughts
Terra is the continuation of Terra Classic. It seeks to build a blockchain that allows for decentralized apps and communities to be build on top of. It seeks to continue the building blocks that were constructed by Terra Classic.
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