# Terra Classic (LUNC)

**Rank:** #167
**Type:** Coin
**Source:** [View on Coinpaprika](https://coinpaprika.com/zh/coin/lunc-terra-classic/)

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## About

### What is Terra Classic?

Terra Classic (LUNC) is a decentralized blockchain platform that was originally launched by Terraform Labs. It is designed to facilitate stablecoin payments and decentralized finance (DeFi) applications. Terra Classic operates on its own native Layer 1 blockchain, utilizing a Delegated Proof-of-Stake (DPoS) consensus mechanism. The network's primary token, LUNC, serves multiple roles, including governance, staking, and transaction fees within the ecosystem.

What makes Terra Classic significant is its initial focus on creating a stablecoin ecosystem that leverages algorithmic mechanisms to maintain price stability. The platform was initially known for its algorithmic stablecoin, which aimed to offer an alternative to traditional fiat-pegged cryptocurrencies. Terra Classic's infrastructure supports smart contracts, enabling developers to build decentralized applications (dApps) on its blockchain.

Despite facing challenges, Terra Classic remains a noteworthy project due to its innovative approach to stablecoin technology and its role in the broader DeFi landscape. Its native token continues to play a crucial part in the governance and operation of the network, allowing token holders to participate in decision-making processes.

### When and how did Terra Classic start?

Terra Classic originated in January 2018 when Terraform Labs, founded by Do Kwon and Daniel Shin, released its whitepaper. The project aimed to create a stablecoin ecosystem on the blockchain to facilitate global payment systems. Terra's testnet went live in 2018, allowing developers to experiment with its functionalities. The mainnet was officially launched in April 2019, marking its initial public availability.

Early development was focused on building a decentralized stablecoin system, with TerraUSD (UST) being a significant component. The initial token distribution was conducted through a private sale, raising funds from notable investors, including Binance Labs and Polychain Capital, to support its development and ecosystem growth. These foundational steps set the stage for Terra Classic's expansion and integration into the broader blockchain and financial ecosystems.

### What’s coming up for Terra Classic?

According to official updates, Terra Classic is focusing on several upcoming initiatives aimed at enhancing the network's functionality and governance. A key milestone includes a protocol upgrade targeted for the next quarter, which is intended to improve network scalability and security. Additionally, there are governance proposals in the pipeline that aim to refine the tokenomics and community engagement strategies. These proposals are expected to be voted on in the coming months. Terra Classic is also exploring partnerships to expand its ecosystem, with integration efforts tentatively scheduled for later this year. These initiatives are designed to bolster the network's resilience and ensure its continued relevance in the evolving blockchain landscape. Progress on these developments can be tracked through the project's official governance and development portals.

### What makes Terra Classic stand out?

Terra Classic distinguishes itself through its unique focus on algorithmic stablecoins, which are designed to maintain price stability via a mechanism that adjusts the supply of its native token, LUNC, based on demand. This approach enables seamless cross-border transactions with reduced volatility. Terra Classic employs the Tendermint consensus algorithm, which enhances its throughput and ensures fast finality, making it suitable for high-frequency applications. The platform supports interoperability through the Cosmos SDK, allowing it to connect and operate with other blockchains within the Cosmos ecosystem. Governance is community-driven, with token holders having a say in the project’s development and decision-making processes. Terra Classic's ecosystem includes various decentralized applications and partnerships that leverage its stablecoin infrastructure, contributing to its distinct role in the blockchain landscape.

### What can you do with Terra Classic?

Terra Classic's LUNC token serves multiple purposes within its ecosystem. It is primarily used for transaction fees, enabling users to send value and interact with decentralized applications built on the Terra Classic blockchain. Holders of LUNC can stake their tokens, which helps secure the network and allows them to participate in governance by voting on proposals that influence the future direction of the network.

For developers, Terra Classic offers a platform to build decentralized applications (dApps) and integrations, leveraging its blockchain infrastructure. The ecosystem supports various tools and applications, including wallets and marketplaces, which facilitate interactions with LUNC. Additionally, Terra Classic is involved in decentralized finance (DeFi) and other blockchain-based solutions, providing a versatile environment for both developers and users.

### Is Terra Classic still active or relevant?

Terra Classic remains active through ongoing development and community engagement. As of recent updates, the project has seen governance activities, such as proposals and votes, which indicate a functioning and involved community. The development team has been focusing on maintaining and improving the blockchain's infrastructure. Terra Classic continues to be listed on various exchanges, maintaining a presence in the cryptocurrency market. These factors demonstrate its ongoing activity and relevance, particularly within the decentralized finance sector. Despite past controversies, the project's continued development and active governance suggest it remains a part of the broader cryptocurrency ecosystem.

### Who is Terra Classic designed for?

Terra Classic is designed for a range of users, primarily targeting developers and financial institutions seeking to create and utilize decentralized financial applications. It enables them to achieve efficient and scalable financial solutions by leveraging its blockchain infrastructure. Terra Classic provides a suite of tools and resources, including software development kits (SDKs) and application programming interfaces (APIs), to facilitate the development and integration of decentralized applications.

Secondary participants such as validators and liquidity providers also play a crucial role in the Terra Classic ecosystem. Validators engage in maintaining the network's security and consensus through staking, while liquidity providers contribute to the stability and functionality of the platform by participating in decentralized finance (DeFi) activities. These roles collectively support the broader ecosystem, ensuring a robust and dynamic environment for all users involved.

### How is Terra Classic secured?

Terra Classic is secured using a Delegated Proof of Stake (DPoS) consensus mechanism, where validators play a crucial role in confirming transactions and maintaining the network's integrity. Validators are elected by token holders who delegate their tokens, and these validators are responsible for producing new blocks and validating transactions. The network employs cryptographic techniques such as Ed25519 for digital signatures, ensuring authentication and data integrity.

To align incentives, Terra Classic offers staking rewards to validators and delegators, encouraging honest participation. Conversely, the network implements slashing penalties to deter and punish malicious behavior, such as double-signing or prolonged downtime. These penalties help maintain the network's security and reliability.

Additional safeguards include regular audits and a robust governance process, allowing token holders to propose and vote on changes to the protocol. This participatory governance model helps ensure that the network remains resilient and adaptable to emerging challenges.

### Has Terra Classic faced any controversy or risks?

Terra Classic has faced significant controversy and risks, primarily related to its dramatic collapse in May 2022. The incident involved the de-pegging of its stablecoin, UST, from the US dollar, leading to a massive loss of value for both UST and its sister token, LUNA. This event was triggered by a combination of factors, including large-scale withdrawals and a lack of sufficient collateral to maintain the peg, resulting in a death spiral that wiped out billions in market value.

The response involved halting the blockchain temporarily to prevent governance attacks, followed by a community-driven proposal to fork the blockchain, creating Terra 2.0 while renaming the original chain to Terra Classic. The new chain aimed to rebuild trust and stabilize the ecosystem. Despite these efforts, ongoing risks include regulatory scrutiny and market volatility. The Terra Classic community continues to work on governance and development practices to mitigate these risks, focusing on transparency and security audits to prevent future incidents.

