TerraUSD listed in Tokenbase


The Terra protocol is a public blockchain for algorithmic stablecoins built using the Tendermint Cosmos SDK. The protocol is part of the Cosmos network, often referred to as the “Internet of Blockchains.” Terra aims to be a family of stablecoins pegged to the world’s major fiat currencies. The stablecoin with the broadest adoption is UST, pegged to the US dollar. There are two types of tokens in the Terra protocol: all Terra stablecoins and the native blockchain token Luna (LUNA).

Authors: Valentin Kalinov, Christian Viehof

The stablecoin market is still dominated by tokenized funds like Tether and USDC. While centralized, these coins offer investors stable peg and deep liquidity. For many years developers have been trying to create a stablecoin not controlled by a central entity and not backed by collateral. Most of these algorithmic stablecoins have failed in two ways. Either they have been too volatile or entered a death spiral and lost their stability. Ampleforth (AMPL), for example, is an algorithmically controlled stable asset pegged to the US dollar while adjusting for inflation. AMPL can be categorized as a rebase token, a subcategory of algorithmic stablecoins. Looking at the price chart, AMPL has been underperforming and has always been too volatile for regular investors. Other algorithmic stablecoins like Empty Set Dollar have entered a death spiral and died off.

Launched in April 2019, Terra has been keeping its peg ever since. Terra protocol is a two-token model stablecoin platform with an elastic monetary policy. On the one hand, we have stablecoins like UST, KRT (TerraKRW), and LUNA, which is the native utility token of the Terra blockchain. While not backed by collateral, UST is heavily dependent on LUNA. Since Terra runs its own blockchain infrastructure, the Luna token has multiple roles. It is part of the mining rewards, protocol governance, transaction fee structure, and the price stabilization mechanism of the Terra stablecoins. Price volatility is moved from UST’s price to LUNA supply. There is a basic rule: Users burn LUNA to mint UST, KRT, etc., and burn UST, KRT, etc., to mint LUNA. If the value of UST rises above the peg, users can burn one dollar worth of LUNA for one UST. When the price of UST drops below one dollar, investors burn UST for one US dollar worth of LUNA, leading to supply reduction of UST. In addition, Terra has introduced capital controls to ensure the withdrawal rate isn’t too severe, where swapping more than $30 million UST for LUNA would create a massive spread on-chain. Basically, there are daily limits on how much LUNA can be minted.

Tokenomics of Terra Protocol

LUNA, UST, and all other stablecoins running on the Terra protocol are tightly connected. Terra is one of the few protocols where the whole underlying infrastructure from the blockchain to the built apps on top is focused on stablecoins. LUNA is the native utility token of the Terra blockchain. It is responsible for transaction fees and validator staking related to the Delegated-Proof-of-Stake consensus algorithm and stabilization of UST. Today, LUNA is the second biggest network of staked value after Ethereum. Terra incentivizes two major activities for the LUNA tokens: burning and staking. Each time UST is minted, the equal value of LUNA gets burned, reducing the total supply of LUNA. On the other hand, the protocol incentivizes LUNA holders to stake their coins for additional rewards from the validators. Since 2020 Terra waives any block rewards and relies only on the collected transaction fees. All these strategies aim at reducing the supply of available LUNA tokens in circulation. As of today LUNA is a deflationary asset.

Initially, Terra launched with an ecosystem of three apps: (1) Anchor for savings, (2) CHAI for payments, and (3) Mirror for investing in synthetic assets. As of today, Anchor plays a significant role in the Terra ecosystem. Anchor offers a variable interest rate on all UST deposits. Four types of users exist in the Anchor ecosystem: (1) depositors (lenders), (2) borrowers, (3) liquidators, and (4) ANC liquidity providers.

Total Value Locked of Terra by Protocol.
Figure 1: Total Value Locked of Terra by Protocol. Source: Footprint Analytics

Anchor accepts UST for deposits and offers one of the highest interest rates in the DeFi space. As of today, Anchor offers 20% APY for deposits. There is a trend of depositors outnumbering the borrowers in the system. Many critics see Anchor as a potential risk for the whole Terra ecosystem because it manages a big proportion of UST. Back in July 2021, Terra protocol injected $70,000,000 UST into Anchor because it was at risk of running out of funds. This was a warning sign for some investors who see Anchor’s yields as unsustainable long term. On top of that, UST is an algorithmic stablecoin that is yet to be battle-tested in a strong bear market. Most algorithmic stablecoins fail that test. Nevertheless, Terra has a thriving ecosystem and a very promising future. It is one of the most interesting stablecoin projects in the crypto space.

The classification of UST according to the ITC:

Figure 2: The UST Tokenbase entry (Source: https://itin.itsa.global/YMJX3H8H5)

Economic Purpose (EEP): UST is listed as a fiat-pegged payment token (EEP21PP01USD) similar to the other stablecoins in the industry.

Industry Type (EIN): The issuer of UST is active in the field of Payment Services and Infrastructure (EIN06PS).

Technological Setup (TTS): UST is a Ledger Native Token (TTS4BC).

Legal Clam (LLC): The UST token does not entitle its holder to any legal claim or rights against the issuing organization therefore it is listed as a No-Claim Token (LLC31).

Issuer Type (LIT): The dimension “Issuer Type” provides information on the nature of the issuer of the token. The Terra infrastructure is built by Terra Form Labs, but UST as a stablecoin is an Entity without Legal Personality (LIT62DL).

Regulatory Framework (EU) (REU): The dimension “Regulatory Status EU” provides information on the potential classification of a token according to the European Commission’s proposal for a Regulation on Markets in Crypto Assets (MiCA, Regulation Proposal COM/2020/593 final). The UST token qualifies as a Crypto Asset out of Scope of MiCA (REU52) according to the definition provided in Article 3 (5) of Regulation Proposal COM/2020/593 final.

List of all Terra tokens:

Figure 3: Tokenbase list with all Terra tokens (Source: https://api.itsa.global)

The International Token Standardization Association (ITSA) e.V.

The International Token Standardization Association (ITSA) e.V. is a not-for-profit association of German law that aims at promoting the development and implementation of comprehensive market standards for the identification, classification, and analysis of DLT- and blockchain-based cryptographic tokens. As an independent industry membership body, ITSA unites over 100 international associated founding members from various interest groups. In order to increase transparency and safety on global token markets, ITSA currently develops and implements the International Token Identification Number (ITIN) as a market standard for the identification of cryptographic tokens, the International Token Classification (ITC) as a standard framework for the classification of cryptographic tokens according to their inherent characteristics. ITSA then adds the identified and classified token to the world’s largest register for tokens in our Tokenbase.

  • The International Token Identification Number (ITIN) is a 9-digit alphanumeric technical identifier for both fungible and non-fungible DLT-based tokens. Thanks to its underlying Uniform Token Locator (UTL), ITIN presents a unique and fork-resilient identification of tokens. The ITIN also allows for the connecting and matching of other media and data to the token, such as legal contracts or price data, and increases safety and operational transparency when handling these tokens.
  • The International Token Classification (ITC) is a multi-dimensional, expandable framework for the classification of tokens. Current dimensions include technological, economic, legal, and regulatory dimensions with multiple sub-dimensions. By mid-2021, there will be at least two new dimensions added, including a tax dimension. So far, our classification framework has been applied to 99% of the token market according to the market capitalization of classified tokens.
  • ITSA’s Tokenbase currently holds data on over 4000 tokens. Tokenbase is a holistic database for the analysis of tokens and combines our identification and classification data with market and blockchain data from external providers. Third-party data of several partners is already integrated, and API access is also in development.


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Valentin Kalinov is an Executive Director at International Token Standardization Association (ITSA) e.V., working to create the world’s largest token database, including a classification framework and unique token identifiers and locators. He has over five years of experience working at BlockchainHub Berlin in content creation and token analysis, as a project manager at the Research Institute for Cryptoeconomics at the Vienna University of Economics and token analyst at Token Kitchen. You can contact Valentin via valentin.kalinov@itsa.global and connect on Linkedin if you would like to further discuss ITSA e.V. or have any other open questions.

Christian Viehof is an Executive Director at the International Token Standardization Association (ITSA) e.V., working to create the world’s largest token database including a classification framework and unique token identifiers and locators. He completed his Bachelor in Economics at the University of Bonn, the Hong Kong University and the London School of Economics and Political Science with a focus on Behavioral Economics and Finance. Currently pursuing his Master of Finance at the Frankfurt School of Finance and Management, you can contact him via christian.viehof@itsa.global and connect with him on Linkedin, if you would like to further discuss ITSA e.V. or have any open questions.



International Token Standardization Association

The International Token Standardization Association (ITSA) is a not for profit organization working on holistic market standards for the global token economy.