LUNA is the native asset of the Terra protocol, the blockchain developed by Terraform Labs, based on the Tendermint consensus and the Cosmos SDK. The LUNA coin is a native asset that collateralizes the Terra network's stablecoins. Meaning, when investors invest in Terra, they are buying LUNA. Some of those investors include Binance, Huobi, OKEX, Hashed, Polychain, Kakao, Coinbase, Galaxy, Arrington XRP, and Pantera.
LUNA is used to mint a stablecoin, like UST, on the Terra network, in which case a user has to burn the equivalent dollar amount of LUNA. In the Terra system, a user can also burn the equivalent value of stablecoins in order to receive LUNA, which is a financial incentive to ensure Terra stablecoins maintain their fiat peg. LUNA is also used if someone wants to become a validator in the Terra protocol, where that person has to demonstrate investment by staking LUNA tokens.
Holders of LUNA decide how those funds get spent and are able to change various parameters of the Terra blockchain, with the balance between Terra stablecoins and LUNA meant to be analogous to the relationship between the Earth and the moon. When launched, Terra held a series of private sales for the LUNA coin in early 2019, but there has not been a public ICO. These private sale prices range from 16 to 80 cents per coin, with reports that private sales raised anywhere from 32 to 72 million dollars.
In the initial private sale of LUNA, 10 percent of the token was reserved for Terraform Labs future development, with 20 percent allocated for project participants and employees; a further 20 percent of the private sale was reserved for the Terra Alliance, 26 percent was given to project backers, 20 percent was allocated towards price stability reserves, and the final 4 percent was offered to genesis liquidity. The distribution is meant to help maintain the fait pegs of Terra, with the tokens allocated to the Terraform Labs team and private investors expected to be fully vested by Spring of 2022. There is uncertainty around how many LUNA were minted at Genesis.
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