Digital asset ETP specialist 21Shares has introduced the world’s first ETP providing exposure to LUNA, the native token underpinning the Terra blockchain.
Terra aims to disrupt traditional banking by making stablecoins and decentralized finance broadly available.
The 21Shares Terra ETP (LUNA SW) has been listed on SIX Swiss Exchange and is available to trade in US dollar, euro, and Swiss franc share classes.
Terra was founded in 2018 by Daniel Shin, co-founder of South Korean e-commerce platform TicketMonster, in partnership with Do Kwon, a former Microsoft and Apple software engineer.
The Terra blockchain, which is capable of processing a transaction in just two seconds and up to 10,000 transactions per second, underpins an extensive decentralized finance (DeFi) ecosystem based on the issuance of algorithmically managed stablecoins.
Stablecoins are cryptocurrencies that are pegged to reserve assets such as major fiat currencies. They are commonly used in DeFi applications as they enable investors to generate yield on their crypto assets while alleviating the potential adverse effects of market volatility.
Terra’s aim is to disrupt traditional finance by satisfying all of an individual’s banking needs in one place. The blockchain’s ‘Anchor’ protocol is considered its most significant, enabling borrowing and lending solutions by generating yields on investors’ stablecoins.
However, Terra’s applications go much further. Dozens of DeFi applications are also running on Terra with some of the most notable being CHAI, a payments app currently used by more than 25 million South Koreans; Ozone, an insurance service; Mirror, which allows investors to gain synthetic exposure to traditional asset classes such as US equities; and Pylon, which provides principal-protected investment opportunities.
LUNA serves two primary functions on the Terra blockchain. It is used to verify transactions on the Terra blockchain, using the less energy-intensive proof-of-stake model, and also regulating Terra’s stablecoin pegs through an arbitrage mechanism. This latter function can, however, add a potential layer of volatility if systemic problems arise related to the stablecoins.
LUNA has been one of the best-performing cryptocurrencies in 2021, adding more than 13,800% to its value last year. With a current market capitalization of $28.5 billion, it is the ninth-largest cryptocurrency globally.
The 21Shares Terra ETP offers institutional investors easy access to the LUNA token through a liquid, regulated vehicle without the technical challenges of setting up private keys or crypto wallets.
It uses full direct, ‘physical’ replication with each ETP share being 100% collateralized by a corresponding investment in LUNA which is stored using an institutional-grade custody solution provided by Copper.
The ETP comes with an expense ratio of 2.50%.
Hany Rashwan, CEO of 21Shares, said: “We have been following the Terra ecosystem for a long time and have been very impressed with its development and traction. We are thrilled to offer investors the world’s first listed ETP tracking this innovative product.”