Terra, a type of cryptocurrency made in Korea and listed on coin exchanges around the world.
It is a bitcoin created by two people, Do Kwon and Hyun Sung-shin (Ticket Monster, founder of Timon Platform). At one point, the global stablecoin market cap was the third-largest. Luna, which will be explained later, is also the 10th cryptocurrency in the world.Luna, which went public in the second half of 2019, started climbing in 2021 and hit a high in April 2022. Its size is 50 trillion won (US$37.87 billion), which exceeds the market capitalization of Naver’s giant platform of 45 trillion won.
Naver is a unique online platform in Korea. However, Terra and Luna have been delisted from exchanges around the world and have zero value. It is said that all public opinion is now a Ponzi scheme and one day it will explode, but a few months ago, it was evaluated as an innovative technology and idea in the market. The principle of Terra, Luna is to have a stable coin, that is, a stable price because the price is fixed on another currency. The biggest risk of general cryptocurrency is high price volatility. This is because the price is low for a few days and the high price fluctuates. The principle is that the price of cryptocurrency is linked to the U.S. dollar to ensure stability. With this principle, it rapidly increased in size and value. However, Terra was a little different from ordinary stablecoins.
Terra created an additional coin called “Luna” and used its algorithm to make Terra a stable coin. Algorithms were created through simple laws of acceptance and supply. I fixed one terra at one dollar.This is the Terra system.One terra is exchanged for Luna, which is equivalent to one dollar, and on the contrary, Luna, which is equivalent to one dollar, is exchanged for Terra.
In other words, the principle of taking the interchange profit of Luna and Terra based on $1 is that Terra owners are guaranteed the right to convert Terra into $1 by Terraform Labs, but in detail, they have the right to convert it into Luna, which is equivalent to $1 at the time of exchange. You might wonder what the difference is with a dollar, but the problem is that Luna is also a coin that changes its value in real time. If Luna’s market price falls together in real time without defense after changing Terra to Luna, the value guarantee of $1 will eventually fail, and the moment Terra fails to guarantee the value of $1 will collapse, preventing the bank run crisis.Due to this imaginary number, Do Kwon and Sung Hyun-shin, who caused a series of massive victims and created the Terra System, attempted to flee to various countries and were eventually imprisoned in Montenegro for using fake passports. On top of that, they reportedly gave about $8 million to Kim & Chang, Korea’s largest law firm, as the head of the department before fleeing.For them, they will travel from Korea to Montenegro to defend the fate of their clients. Do Kwon is likely to be summoned to the U.S., and Sung Hyun-shin is expected to stand in court in each Korean country.
TED PARK
US ASIA JOURNAL
