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What is TerraUSD?
TerraUSD is a decentralized stablecoin that follows the principle of infinite scalability. It was launched in 2018 by a South Korean organization called Terraform Labs, which was introduced by Daniel Shin and Do Kwon. Apart from being a monetary tool, it is also a platform where you can run decentralized finance protocols and applications without any restrictions.
The principal objective behind the creation of this crypto coin was interchain operability. It runs on the Ethereum network and attempts to maintain a one-to-one association with the United States Dollar. Unlike other stablecoins, this one regulates the supply through an algorithm. Every coin is supported by the native coin of Terra called LUNA.
This system is based on the Tendermint Delegated proof-of-stake protocol. For creating a single TerraUSD token, there needs to be a burning process. Here, the system burns some LUNA tokens equivalent to $1. Members stake LUNA coins for receiving incentives and for lowering the volatility of the stablecoin.
You can compare Terra to a central financial institute with a flexible policy that controls the supply of the crypto coin.