Terra (LUNA)

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What is Terra (LUNA)?

Terra (LUNA) is the native staking token of the Terra blockchain. It can be used for governance within the Terra network, allowing holders to vote on the direction of the project and help shape its future.

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Users can also stake Luna to validators in exchange for rewards from transaction fees. Validators are the miners of the Terra blockchain. They run programs called full nodes which allow them to verify each transaction made on the Terra network. 

Techopedia Explains

Terra (LUNA), also referred to as LUNA 2.0, was created after the implosion of Terra’s algorithmic stablecoin UST and the establishment of a new Terra chain.

The token replaced what is now called Terra Classic (LUNC). It was the original native governance token of the Terra ecosystem.

The token was airdropped to the original holders of LUNC and UST. Its proposed supply was capped at 1 billion, which was split between key stakeholders at various snapshots of events in May last year, subject to vesting conditions. 

How Was the New LUNA Created?

Following the high-profile collapse of the Terra network due to some inherent faults in its supposed algorithmic stablecoin, Terraform Labs founder, Do Kwon proposed a revival plan involving a hard fork and abandoning UST. 

The plan advocated for the creation of a new chain called LUNA 2.0, with its token Luna (LUNA). On 25 May 2022, Terra Classic users passed the governance proposal that outlined the genesis of a new Terra chain, dubbed Proposal 1623.

The proposal also described the process for the distribution of LUNA, which would be airdropped to users of the Terra Classic chain based on pre-depeg and post-depeg snapshots.

The new Terra mainnet eventually launched on May 27.

Terra (LUNA) Airdrop and Vesting Details

As part of the original proposal, LUNA, with a total supply of 1 billion tokens, was airdropped to key stakeholders of the blockchain according to specific percentages and vesting periods.

In the first place, the community pool received 30% of LUNA tokens, which will be controlled by staked governance. Notably, 10% of this portion was earmarked for developers in an effort to support the growth and innovation of the Terra ecosystem. 

Another 35% of LUNA tokens were distributed to pre-depeg Luna holders. This included all bonded and unbonding (staked and unstaked) LUNA, excluding Terraform Labs (TFL), at the “Pre-attack” snapshot. 

The vesting schedule for these LUNA holders varies based on the amount of tokens held. Wallets with less than 10,000 LUNA had 30% unlocked at Genesis, with the remaining 70% vesting over two years, including a six-month cliff. 

Wallets with less than 1 million Luna had a one-year cliff, followed by a two-year vesting period. Wallets with over 1 million Luna also had a one-year cliff and a four-year vesting period.

The airdrop also included Luna and UST to holders of pre-depeg aUST (anchored UST) and post-attack Luna and UST holders.

These distributions followed a similar vesting schedule, with 30% unlocked at Genesis and the remaining 70% vesting over two years, including a six-month cliff.

Vesting refers to the process of locking LUNA tokens in an account until a specific date. During the cliff period, these tokens cannot be traded or transferred. After the cliff, LUNA tokens are gradually released based on the vesting period.

For example, if a Terra Classic wallet held less than 10,000 Luna during the pre-depeg snapshot, the LUNA airdrop would follow a vesting schedule of 30% unlocked immediately at genesis, while the remaining 70% will vest over a two-year period, starting after a six-month cliff.

During the vesting period, LUNA can still be delegated, redelegated, or undelegated from validators, allowing users to actively participate in the Terra ecosystem.

Terra (LUNA) Price Performance

Shortly after its launch, LUNA saw its price reach an all-time high of around $18.87. However, the token has been in a constant downtrend ever since, with negative news surrounding Do Kwon putting further pressure on its price.

As of now, LUNA is trading at $0.509117, almost flat over the past day. The token is up more than 26% over the past week but down by almost 80% over the past year.

LUNA is available across some major crypto exchanges, including Binance and Bitgert

The Bottom Line

Terra (LUNA) is the governance and staking token of the Terra blockchain. It was created after the implosion of Terra’s algorithmic stablecoin UST and the establishment of a new Terra chain.

LUNA was distributed among key stakeholders of the Terra chain via an airdrop. However, the token has been in a constant downtrend since its debut, dropping by more than 97% compared to its all-time high. 

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Ruholamin Haqshanas
Cryptocurrency journalist
Ruholamin Haqshanas
Cryptocurrency journalist

Ruholamin is a crypto and financial journalist with over three years of experience. Apart from Techopedia, he has been featured in major news outlets, including Cryptonews, Investing.com, 24/7 Wall St, The Tokenist, Business2Community, and has also worked with some prominent crypto and DeFi projects.  He holds a Bachelor's degree in Mechatronics. Ruholamin enjoys reading about tech developments, writing, and nature-watching