The Terra (SDT) protocol is a public blockchain system for a stablecoin network. Terra’s open-source and decentralized protocol specifically handles algorithmic stablecoins. By definition, stablecoins are the cryptocurrencies pegged to the reserved assets. Here, the base Terra stablecoin, TerraSDT, matches the price of the IMF’s SDR. The International Monetary Fund (IMF) launched Special Drawing Rights (SDR) as an international reserve asset and unit of account. This value is computed regularly using a combination of the world’s top economies. The Terra protocol calculates and sets standards using TerraSDR or SDT as its base currency.

SDRs are the artificial currency instrument created for the internal accounting of the IMF. The value of SDR is derived from major global currencies like USD, British Pound, Japanese Yen, and Chinese Yuan. As SDR is used as an international reserve, Terra aims to keep the price of TerraSDR similar to its price.

According to the whitepaper, there is a demand in both the traditional and blockchain economies for a decentralized, price-stable monetary system. Terra seeks to be both price-stable and growth-driven. Terra stablecoins, being a digital form of currency, may be used in the same way as traditional currency, but with the added features of blockchain, which include an immutable public record, quicker transactions, shorter settlement times, and lower costs. The platform states that Terra’s stablecoins may be exchanged, held, or traded instantaneously on the Terra blockchain.

Terra’s price is stabilized by using traditional market factors such as supply and demand. As Terra’s supply falls and demand rises, its price rises. When demand for Terra is low, and supply is abundant, the price of Terra falls. The protocol guarantees that Terra’s supply and demand are constantly balanced, resulting in a steady price.

The Terra blockchain was cofounded by Daniel Shin and Do Kwon in 2018. Also known as Terraform Labs, it is based out of South Korea. In April 2019, the protocol launched its whitepaper.

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