What You Should Know About UST (Algorithmic Stablecoin on Terra)

Crypto coins have revolutionized the field of finance. Back in the day when fiat currencies were the only solution, people relied on centralized cash systems. As was the case then, centralized cash systems are always at risk in case the world’s economy drops. Centralized finance systems are always controlled by the government, meaning that the people do not have full autonomy over their assets.

Bitcoin and other crypto coins spearheaded the birth and growth of decentralized exchanges. When Bitcoin was launched in 2009, many people doubted that it would ever challenge fiat currencies such as the USD and Euro. Besides that, finance experts didn’t believe that crypto coins would soon oust gold as a monetary asset.

Decentralized Exchanges

Crypto exchange platforms allow people to trade crypto coins. Users can either switch crypto for fiat currencies or vice-versa. Users can also swap their crypto coins for other coins. For example, you can switch your Bitcoin for Ethereum. Most crypto exchange platforms have developed over the years, adding more services to their catalogs.

Most crypto exchange platforms operate as centralized exchange platforms. However, centralized exchanges somehow veer from the main idea behind blockchain technology. This has led to the creation of decentralized exchanges. Decentralized systems operate without an intermediary, and you can go to this web-site for more information about them.

Unlike centralized exchanges, decentralized systems operate on automatic smart contracts to keep track of trades. The main benefits of decentralized exchanges include faster and cheaper transaction charges. Decentralized systems also give the user complete control over their assets. When using a centralized system, you don’t get to keep your private keys. 

The Terra Blockchain

If you’re an avid crypto lover, then you might have heard about the Terra blockchain. The blockchain was developed to support Terra USD, also known as UST. UST is a stable coin, meaning that the crypto coin is backed by the USD. 

Stable coins are often backed by fiat currencies as a way of protecting them from volatility. Crypto coins are very volatile and their prices regularly spike or drop. More often than not, people avoid investing in crypto because of the volatility. This is where stablecoins such as UST come in. A certain quota of Luna coins is destroyed to facilitate the creation of new UST tokens. The reason for this is to help stabilize the coin and also strike a balance. 

Bottom Line

Decentralized exchanges are becoming more popular in the crypto community. Though they are still new with a few drawbacks, it seems as though more crypto lovers will soon shift base. If you’re planning to invest in crypto, buying a few Terra tokens or USTs can be a worthwhile investment.

UST is not as successful as Bitcoin or Ethereum, but its potential is evident. In most cases, investing in a diverse crypto portfolio is always a good option. Always remember to do your research before investing. There are new altcoins popping up every day and not all of them will be successful.

Read more: Top Tips to Know Before You Sell Bitcoin

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