How to Buy Terra - Where to Purchase LUNA?
One of many blockchains to be dubbed an “Ethereum killer”, Terra is a smart contract platform with a focus on stablecoins. Its native token, LUNA, is what keeps the prices of those stablecoins stable.
Terra’s highly efficient Proof of Stake blockchain makes it a serious competitor to Ethereum, and users of both decentralised finance (DeFi) and decentralised applications (dApps) have shown serious interest in the project. This guide will tell you everything you need to know about Terra and how you can buy LUNA.
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Where to buy Terra: compare the top platforms
Those looking to purchase LUNA for the first time will find they are confronted with a wide choice of platforms to buy from. Some important factors to consider when selecting one include the costs and how easy it is to use. Security is also of the utmost importance and regulated platforms are the most likely to keep your funds safe. To help you get started, we’ve created the following shortlist of the top platforms to buy LUNA.
What is Terra?
Terra is a project that combines the price stability of fiat currencies with the fast, low-cost and borderless nature of blockchain technology, while Terra’s programmability enables an ecosystem of dApps and real-world payment solutions. The network is secured through a Proof of Stake consensus mechanism that uses the native LUNA token. Validators and delegators stake their LUNA in return for staking rewards.
Terra issues a series of stablecoins—crypto tokens that are pegged to the value of real-world assets like the U.S. dollar. For people who want to access the features of crypto (such as DeFi), but are deterred by the price volatility of assets such as Bitcoin, stablecoins provide a perfect on-ramp. Terra’s native token, LUNA, is used to algorithmically maintain the prices of Terra’s stablecoins. In simple terms, as new stablecoins are minted, part of the LUNA supply is removed from circulation in a process called “burning”.
Thanks to the inter-blockchain communication (IBC) protocol, Terra-based decentralised applications (dApps) can run on multiple chains and the project aims to expose dApp userbases to Terra’s payment services — of which stablecoins are the centrepiece. TerraUSD (UST) is the most popular of Terra’s fiat-pegged stablecoins.
Should I buy Terra now?
This is a personal decision but the information in this guide should help you make it. The Terra ecosystem appears to show a lot of promise. While Ethereum uses the energy-intensive Proof of Work system, suffering from soaring gas fees and a lack of scalability, dApp developers and users are looking for other options. Terra’s cheap, efficient and scalable blockchain could be an ideal alternative.
This view was bolstered by the “Columbus-5” upgrade. Previously, Terra was home to a few select apps, limited by its lack of scalability, but Columbus-5 brings with it a much higher rate of transactions per second, paving the way for a large and vibrant Terra dApp ecosystem.
The growth of the Terra ecosystem, along with the IBC integration, will likely mean greater demand for UST. As the supply of UST grows, the supply of LUNA shrinks through burning. With sustained LUNA demand, this could be very positive for LUNA price over the coming months and years.
Different ways to buy Terra
Terra can be bought in different ways — some people want to invest in it for the long term, while others prefer to trade it on a much shorter timescale. This is a personal choice and what you decide will depend on your own experience, strategy and investment goals.
Buy and hold Terra
LUNA is becoming increasingly popular as a long-term investment, and there are some good reasons for this. LUNA can be staked, which means your tokens won’t just be sitting idle while you’re invested. Instead, you can delegate your tokens to a validator and earn regular staking rewards. Meanwhile, growing UST popularity puts upward pressure on LUNA price.
Investors should also be mindful of events that could depress the price of LUNA, at least in the short term, such as market-wide crashes and the activity of competitor blockchains, especially Ethereum if it successfully rolls out Ethereum 2.0.
Like most cryptocurrencies, LUNA is far more volatile than traditional financial assets. While this can make investors nervous, it also presents an opportunity for traders. They can take advantage of regular price fluctuations to buy and sell crypto more quickly, making more frequent profits.
Traders don’t even have to hold LUNA — they can trade derivatives to profit from price fluctuations without the hassle of actually owning and custodying LUNA. Available derivatives products include contracts for difference (CFDs), futures and options. Traders can additionally use leverage to increase profits — but beware that this can also increase losses.
Do I need a wallet?
If you buy LUNA, you will need to keep it somewhere — and there are a range of wallets available. It may be stored somewhere for you automatically by your trading platform when you buy it, but you can always set up your own secure wallet if you want to.
It should be noted that those trading CFDs and other derivatives of LUNA don’t require a wallet as they don’t actually hold any LUNA tokens.
Setting up a wallet
Different wallets provide different features and levels of security, so the amount of LUNA you hold and what you plan to do with it will likely affect whether you decide to set up your own wallet and which type you choose.
Web wallets — These wallets are usually free but also tend to be the least secure. Exchanges and brokerages often provide web wallets, which are very convenient, especially for those with a small amount of LUNA or who will be making frequent trades.
Desktop wallets — Free software wallets that can be downloaded onto desktops, these tend to be a bit more secure than web wallets and are almost as convenient. They are therefore also suitable for small-time LUNA holders and somewhat frequent traders.
Mobile wallets — Another type of free software wallet, these are similar to desktop wallets but are downloaded onto mobiles. Their features and benefits are similar to desktop wallets, with the added convenience of having access to your funds on the move.
Hardware wallets — These physical storage devices are available from Ledger, Trezor and KeepKey. They can be expensive but users are paying for the strongest possible security. Hardware wallets are ideal for long-term investors with a lot of LUNA.
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Frequently Asked Questions
LUNA initially had a total supply of 1 billion tokens, but there is no hard max supply as the supply is dynamic. LUNA is minted and burned to contract and expand the supply of UST and other Terra stablecoins, thereby stabilising their price. This is why the growing popularity of UST could decrease the supply of LUNA, potentially leading to a price rise.
This is a personal choice. Those making very long-term investments don’t really need to worry about short-term price fluctuations, so the timing of the investment isn’t that important. Shorter-term investors may prefer to wait for a dip in LUNA price before buying in the hopes of increasing their returns during that market cycle. Traders, on the other hand, will likely use technical analysis to decide when to make trades according to their chosen strategy.
This is also a personal choice as it depends on your financial situation, investment strategy and risk appetite. It’s always wise not to invest more than you could afford to lose. It’s also possible to generate higher returns on a smaller amount by trading with leverage, but this can also lead to greater losses so should only be undertaken by those who are experienced and confident in their leveraged trading.
If you’re going to be holding LUNA for a while, staking could be a great way to generate some passive income. You can use the project’s own wallet, Terra Station, which lets you select one or more validators to delegate your LUNA to. You then just click “Delegate” and your rewards automatically start accruing to be withdrawn at any time. Some other wallets and exchanges also offer LUNA staking. Unstaking can be done at any time but your LUNA will be locked for 21 days.
Some protocols built on the Terra blockchain provide extra utility for LUNA. For example, LUNA can be used as collateral to mint synthetic assets through Mirror Protocol or borrow Terra stablecoins in the Anchor money market. What’s more, LUNA holders can use the Terra bridge to transfer their LUNA value to other blockchains such as Ethereum to take advantage of decentralised finance (DeFi) opportunities.