Terra (LUNA) is a public blockchain protocol that originated from Terra Classic. The latter hosted the algorithmic stablecoin TerraClassicUSD (UST), which was backed by the now-renamed LUNC token. In May 2022, a bank run caused UST to crash, driving LUNA’s value to virtually zero and prompting the creation of a new chain, which split the ecosystem into Terra Classic and Terra.

Development for Terra Classic began in January 2018, with the blockchain launching in April 2019. The project aimed to merge the censorship resistance of Bitcoin (BTC) with the price stability and broad acceptance of fiat currencies, providing quick and low-cost settlements via its UST stablecoin. Terra Classic featured stablecoins pegged to the U.S. dollar, South Korean won, Mongolian tugrik, and the International Monetary Fund's Special Drawing Rights basket.

The new Terra blockchain carries on the legacy of Terra Classic but excludes the UST stablecoin. It plans to continue developing with support from the LUNA community, known as “LUNAtics,” and aims to evolve the high-quality UX and UI that helped Terra Classic reach second place in total value locked (TVL) at its peak. Numerous DApps have agreed to migrate to Terra to maintain their operations.

Daniel Shin and Do Kwon established Terra in January 2018. They designed the initiative to accelerate blockchain and cryptocurrency usage by emphasizing usability and price stability. Kwon assumed the role of CEO at Terraform Labs, the entity responsible for Terra.

Before creating Terra, Shin co-founded and led Ticket Monster (TMON), a significant South Korean e-commerce site. He also co-established Fast Track Asia, an incubator that assists entrepreneurs in developing operational businesses.

Kwon previously founded Anyfi, where he served as CEO, offering decentralized wireless mesh networking services. His background includes software engineering roles at Apple and Microsoft.

Following the failure of Terra Classic, Do Kwon released a recovery strategy that resulted in a hard fork separating Terra Classic from Terra. This approach drew criticism from Binance creator Changpeng Zhao, Vitalik Buterin, and unhappy UST holders. The community approved the proposal, leading to the hard fork of Terra Classic into the new Terra blockchain on May 27, 2022.

Terra moves forward without its algorithmic stablecoin UST, aiming to sustain the ecosystem with hundreds of developers building diverse decentralized applications. The LUNA token will be airdropped to Luna Classic stakers, holders, residual UST holders, and vital Terra Classic app developers. By removing the Terra Foundation Labs wallet from the airdrop, Terra becomes a fully community-owned chain. The distribution uses two snapshots: one before the Terra Classic crash on May 7 and one after on May 27. Airdrop eligibility is as follows:

Terra (LUNA) has a total supply of 1 billion tokens, allocated in the following manner:

• Developer mining program: 8%
• Essential app developers receive a share of these proceeds pro-rata based on TVL every quarter for 4 years.
• Developer alignment program: 1.5%
• Protocol teams active on Terra Classic split this allocation weighted by the last 30 days of TVL from the Pre-attack snapshot. This includes a 1-year cliff followed by 3 years of vesting. Adjustments are made for apps where TVL does not apply.
• Emergency allocation to app developers: 0.5%
• Distributed immediately after launch to support product development runway. Funds must be returned if the product is not launched within 1 year.
• Community pool: 20%
• Managed via staked governance.
• Pre-attack LUNA holders: 35%
• Includes all bonded and unbonding Luna (minus TFL) and staking derivatives at the “Pre-attack” snapshot.
• Wallets with < 10k Luna: 30% unlocked at genesis; 70% vests over 2 years with a 6-month cliff.
• Wallets with < 1M Luna: 1-year cliff, then 2 years of vesting.
• Wallets with > 1M Luna: 1-year cliff, then 4 years of vesting.
• Pre-attack aUST holders: 10%
• Subject to a 500K whale cap, covering up to 99.7% of holders but only 26.72% of aUST.
• 30% unlocked at genesis; 70% vests over 2 years with a 6-month cliff.
• Post-attack LUNA holders: 10%
• Includes staking derivatives.
• 30% unlocked at genesis; 70% vests over 2 years with a 6-month cliff.
• Post-attack UST holders: 15%
• 30% unlocked at genesis; 70% vests over 2 years with a 6-month cliff.

Key definitions:

• The “Pre-attack” snapshot occurs at Terra Classic block 7544910 (2022.05.07 22:59:37+08:00).
• The “Post-attack” snapshot occurs at Terra Classic block 7790000 (2022.05.27 00:38:08+08:00).

All vested or locked tokens are staked at genesis and require unbonding to become liquid. Additionally, Terra plans to burn the remaining 1B UST from the community pool to lower outstanding ecosystem debt. The LUNA airdrop is scheduled for May 28, 2022, at 06:00 GMT.

The Terra blockchain relies on a Tendermint-based proof-of-stake consensus mechanism. In this system, LUNA token holders lock up their tokens as collateral to validate transactions, earning rewards that correspond to the quantity of LUNA they have staked. To encourage network security, Terra plans to offer staking rewards through 7% annual inflation. This approach aims to align validator interests with the long-term success of the Terra ecosystem.

A number of centralized platforms have pledged to list the new LUNA token, including KuCoin, Huobi, Bitrue, Bitfinex, Gate.io, Bybit, and LBank. Additional exchanges are anticipated to join them in the near future.

To qualify based on the May 7 snapshot, you needed to hold:

• Luna Classic (LUNC), which includes staking derivatives
• Under 500k aUST (UST deposited in Anchor)

For the May 27 snapshot, eligibility required holding:

• Luna Classic (LUNC), including staking derivatives
• UST

At the genesis block, 30% of the LUNA airdrop becomes instantly accessible for two groups: pre-attack users whose wallets contained fewer than 10k LUNA (including staking derivatives) or UST deposited in Anchor, and post-attack users holding any amount of LUNA (including staking derivatives), UST, or a combination of both.

Additionally, any vested LUNA received via the airdrop is automatically staked with Terra validators. While holders can switch their delegator and accumulate staking rewards on this vested LUNA, they must adhere to a six-month cliff period. For comprehensive information regarding the Terra (LUNA) airdrop, refer to the explainer article provided by Terra.