Cryptocurrencies continue to gain its momentum, but the industry keeps on facing challenges in ensuring mass adoption of this technology.
According to Terra Head of Research Nicholas Platias in an interview with e27, the most common issues that have been preventing the public from adopting the technology are price volatility and its lack of real-world use.
“Both are absolutely necessary if crypto is going to become a more mainstream part of everyday lives … How do you design a protocol which keeps the currency stable? How do you get it used and usable, and turn it into actual currency?” he says.
To tackle the issue, Terra creates a price-stable cryptocurrency –stable coin– that can be readily used on its blockchain payment solution.
In a statement, the company explained that its cryptocurrency was conceived in response to the need for a stable digital currency, that is immune to the price volatility that comes with speculation and manipulation.
It also aims to bridge between digital currencies and real-world application by becoming an open platform where “innovative” financial apps can be built upon its promised stability
To keep the price stable, Terra is backed by a decentralised asset called Luna, that derives its value from transaction fees collected on the Terra network.
The company likens the relationship between Terra and Luna to the Earth and the moon, which helps stabilise the Earth’s rotation.
“We design Luna in a way that we have this reserve in which we can borrow some Luna whenever necessary to buy back Terra, until there’s a shift of demand,” Platias explains.
Mainly used for tradings, the company aims to push for greater use of stable coins through e-commerce.
They are doing it by forming a partnership with leading e-commerce platforms in Asia to leverage on the platforms’ large and ever-growing transaction volume. Similar model has been used by AliPay and PayPal, and by Go-Pay in Indonesia, which were able to grow by capturing the rising transaction volumes on TaoBao, eBay, and Go-Jek.
Called the Terra Alliance, the partnership includes a total of 15 e-commerce companies such as Woowa Brothers, Qoo10, Carousell, Pomelo, and TIKI.
Terra aims to continue on adding new e-commerce platforms to the partnership, and according to Platias, in the long run this will also include offline retailers.
“You get to scale very fast [by working with these companies],” he says.
With a presence in Singapore, Terra was co-founded in South Korea by Daniel Shin and Do Kwon, who are no stranger to the country’s startup community.
Shin is the founder and former CEO of TicketMonster, a South Korean e-commerce platform with US$3.5 billion in GMV, in addition to being the co-founder and board member of company builder Fast Track Asia. The firm has established and sold businesses including office sharing platform Fast Five and food delivery platform FoodFly, which was acquired by Yogiyo.
A former software engineer at Microsoft and Apple, Do Kwon is the founder and former CEO of Anyﬁ, a wireless mesh network startup building decentralized applications for “real world” use. During his time at Anyﬁ, Do co-invented several of the company’s key patents around decentralised networks and routing systems.
In September, the startup announced a US$32 million seed funding round led by the capital investment arms of global cryptocurrency exchanges Binance Labs, OKEx, Huobi Capital, and Dunamu & Partners, the investment firm behind Upbit operator Dunamu.
The funding round also included the participation of blockchain-focussed funds such as Polychain Capital, FBG Capital, Hashed, 1kx, Kenetic Capital, Arrington XRP, and funds such as TransLink Capital.