Terra: The Binance-backed Stablecoin With a Userbase of 40 Million People
Binance, in partnership with three other cryptocurrency exchanges, has announced the launch of a stablecoin project dubbed “Terra.” The project’s aim, like any other stablecoin, is to encourage consumer use of cryptocurrencies by minimizing price volatility. However, unlike other projects, this one will start off with an entire network of e-commerce sites backing it up.
Subscribe to the Bitsonline YouTube channel for great videos featuring industry insiders & experts
Terra Project Hits the Ground Running
With the backing of Binance Labs, OKEx, Huobi Capital, and Dunamu & Partners, the Korean-based Terra has raised over $32 million USD in funding from both these exchanges and other hedge funds like Polychain Capital.
In addition, Terra will also be partnering with a large network of e-commerce sites for mutual benefit: providing users immediate utility and merchants a potential to differentiate themselves from larger competitors like Alibaba and Amazon.
Indeed, e-commerce merchants that use Terra will be given a reason to root for the cryptocurrency as it would virtually eliminate all costs associated with transaction fees. If this actually ends up being the case in practice, then it could give them a competitive edge over industry giants.
Daniel Shin, co-founder of Terra, thinks the stablecoin could become an instant hit with Asian-based consumers because of its ease-of-use and the relative popularity of e-commerce among Asians in general as compared with the West.
Daniel Shin elaborated on Terra’s ease, saying it wouldn’t require users to know anything about cryptocurrency — all they need to know is that it makes shopping cheaper:
“Imagine going to Amazon and clicking “Terra pay’ at checkout. You don’t need a wallet and so on. All you know is it’s a better deal.”
The Rise of ‘Stablecoins’ as Leaders of Crypto Adoption
Arguably, one of the biggest impediments to mass adoption of cryptocurrency as mediums of exchange is their proneness to extreme price volatility.
This problem has lead to the emergence of so-called “stablecoins,” providing traders with safe havens during market downturns. In theory, they provide all the benefits of crypto without the costs — most notably, risk due to price volatility.
Tether, a crypto whose value is pegged to the US dollar, is one notable example of a stablecoin. Others include MakerDao, USDX, and TrueUSD — all of which attempt to minimize price fluctuations via pegging it to fiat or by way of “collateralized debt positions.”
Terra will initially be pegged to the U.S. dollar, but over time each transaction will generate a small payout to a second cryptocurrency, dubbed Luna, that will serve as the stabilizing reserve fund and will be used to eventually wean the project off of fiat currency.
What do you think of Binance and others backing the Terra stablecoin? Let us know in the comments below.
Images via Binance, Terra