WLUNA and LUNC are digital tokens representing Terra, a blockchain-based project developed by Terra Labs in South Korea. While LUNC is a native token of the Terra Classic network, wrapped LUNA (WLUNA) is an ERC-20 token representing LUNC on the Ethereum network. Both tokens hold the same value and are interchangeable, but there are essential differences between the two that investors and traders should understand.
In this article, we will explore the definitions of LUNC and WLUNA and the importance of understanding the difference between the two. We will also compare the advantages and disadvantages of using each token, discuss their use cases and applications, and provide recommendations on which token to choose for different investors and traders.
What is LUNC?
LUNC is a native token of the Terra Classic network, a blockchain-based project developed by Terra Labs in South Korea. The network supported the creation of algorithmic stablecoins pegged to various fiat currencies, such as the US dollar, the South Korean won, and the Mongolian tugrik.
The Terra LUNC debacle
LUNA was launched in 2018 and is the primary token used for staking and governance for the Terra network. It has a dynamic supply of 1 billion coins. LUNC is also used to pay transaction fees on the Terra network.
In May 2022, the Terra ecosystem experienced a significant disruption when its algorithmic stablecoin, TerraUSD (UST), lost its peg to the US dollar. This event led to a rapid decline in the ecosystem’s value, resulting in billions of dollars in losses for investors. The impact of this event extended to other cryptocurrencies.
Following these events, supporters of the Terra blockchain project voted to revive LUNA but not TerraUSD. They launched a new version of Terra blockchain. The old blockchain assumed the name Terra Classic, while the new one maintained the name, Terra.
This event serves as a reminder of the potential risks and volatility associated with cryptocurrencies and highlights the importance of conducting thorough research before investing.
LUNC use cases
LUNC holders can stake their tokens to earn rewards and take part in the governance of the Terra ecosystem. Staking involves holding LUNC tokens in a wallet and contributing to the network’s consensus mechanism. The more LUNC tokens a user stakes, the more weight they have in the network’s governance system. This stake allows LUNC holders to have a say in the network’s development. Holders can also use LUNC for staking on the Terra network, which involves validating transactions on the network for rewards.
What is WLUNA
Wrapped LUNA (WLUNA) is an ERC-20 token that serves as a representation of Terra (LUNC) on the Ethereum network. It is not LUNC itself but a separate token designed to track LUNC’s value. Here’s an overview of WLUNA and its role in the Terra ecosystem:
Overview and History of WLUNA
Wrapped LUNA allows LUNC holders to trade, hold, and take part in DeFi dApps on the Ethereum network. It was launched as an Ethereum-based ERC-20 token and represented LUNC on the Ethereum blockchain. WLUNA was established in 2019 to allow LUNC to be used outside of its native blockchain and to enable LUNC holders to take part in the rapidly growing DeFi ecosystem on Ethereum.
WLUNA use cases
One of the prominent use cases for WLUNA is to take part in DeFi protocols on the Ethereum network. The use cases include earning yield benefits, such as interest or trading fees, by lending or borrowing WLUNA on DeFi platforms. Holders can use WLUNA as collateral for other cryptocurrencies or stablecoins on DeFi platforms. Another use case for WLUNA is to provide liquidity for decentralized exchanges (DEXs) that trade LUNC or other tokens.
Differences between LUNC and WLUNA
LUNC and Wrapped LUNA (WLUNA) are often confused but are distinct tokens with some key differences. Here are some main differences between LUNC and WLUNA:
- Interchangeability and the same value: LUNC and WLUNA are interchangeable and have the same value. LUNC is a token on the Terra network, while WLUNA is an ERC20 token used to represent LUNC on the Ethereum network. Every WLUNA token’s price will always be equal to 1 LUNC.
- Different networks and blockchains: LUNC is native to the Terra network, a distinct blockchain network from the Ethereum network. WLUNA, on the other hand, is an ERC20 token that operates on the Ethereum network. While LUNC’s use case is staking and governance, WLUNA allows LUNC holders to trade, hold, and participate in DeFi dApps.
- DeFi opportunities with WLUNA: WLUNA allows users to participate in DeFi protocols to earn yield benefits. For example, users can deposit WLUNA into liquidity pools and earn a share of the transaction fees generated by the pool.
While both have unique features and benefits, they serve different purposes and operate on other networks.
WLUNA’s advantages over LUNC
WLUNA has several advantages over LUNC. These include:
- Accessibility: WLUNA, as an ERC-20 token, is available on the Ethereum network, which has a more extensive user base and more accessible infrastructure than the Terra network. A large user base means users who want to participate in DeFi protocols can do so more easily with WLUNA.
- Interoperability: WLUNA allows LUNC holders to interact with other Ethereum-based tokens and DeFi protocols, which is impossible with LUNC alone. WLUNA expands the range of investment and yield-earning opportunities available to LUNC holders.
- Liquidity: Because WLUNA is an ERC-20 token, it can be traded on various decentralized and centralized exchanges, providing greater liquidity than LUNC. WLUNA holders have more options for buying, selling, and changing their tokens.
- Lower transaction fees: Because Ethereum has a more extensive developer base and more scaling infrastructure, transaction fees for WLUNA are generally lower than those for LUNC on the Terra network.
- Yield opportunities: By participating in DeFi protocols with WLUNA, users can earn yield benefits unavailable with LUNC alone. Yield opportunities can include staking, liquidity provision, and other yield-generating strategies.
WLUNA offers LUNC holders greater flexibility, interoperability, and yield opportunities than LUNC alone. However, it is essential to note that WLUNA has its risks and disadvantages, and investors should carefully consider their investment strategies before purchasing either token.
LUNC’s advantages over WLUNA
LUNC also has advantages over WLUNA. These include:
- LUNC is the native token of the Terra network, and holders can use it for staking, which is not available with WLUNA. In contrast, WLUNA is designed to represent LUNC on the Ethereum network and is primarily used for trading and participating in DeFi protocols to earn yield benefits.
- Since LUNC is a native token of the Terra network, it is not subject to the potential congestion of the Ethereum network that WLUNA may be susceptible to. LUNC transactions on the Terra network can be faster than WLUNA transactions on the Ethereum network at peak hours.
- Holding LUNC tokens also allows users to participate in the governance of the Terra Classic ecosystem by staking their tokens and voting on essential protocol updates. This option is not currently possible with WLUNA.
While WLUNA allows users to trade and participate in DeFi protocols, LUNC offers additional benefits such as staking and governance on the Terra network.
WLUNA vs. LUNC: Which one should you choose?
If you want to invest in Terra and its ecosystem, you may wonder which token to choose between WLUNA and LUNC. Each token has advantages and disadvantages, and the right choice for you will depend on your investment goals and risk tolerance.
Factors to consider:
When choosing between WLUNA and LUNC, there are several factors to consider, including:
- Liquidity: A token’s liquidity can impact how easily you buy and sell it. LUNC, being the native token of the Terra network, has higher liquidity compared to WLUNA, which is a derivative token. Higher liquidity means LUNC may be easier to buy and sell on exchanges.
- Accessibility: While LUNC is limited to the Terra ecosystem, WLUNA can be used on the Ethereum network, giving it greater accessibility to DeFi protocols and other Ethereum-based applications.
- Risk: As a derivative token, WLUNA carries additional risks, such as smart contracts and counterparty risks, that LUNC does not have.
Recommendation:
The choice between WLUNA and LUNC ultimately depends on your investment goals and risk tolerance. Here are some recommendations for different investors and traders:
- Long-term investors looking for exposure to the Terra ecosystem may prefer LUNC due to its direct exposure and higher potential for price appreciation.
- Traders looking for short-term price movements may prefer WLUNA, which may have less volatility than LUNC.
- Investors looking for yield opportunities in DeFi protocols may prefer WLUNA due to its accessibility on the Ethereum network.
Where to buy LUNC
You can purchase LUNC on various cryptocurrency exchanges. Some exchanges where you can buy LUNC include Binance, KuCoin, and Bitfinex. These exchanges are known for their reliability and user-friendly interfaces. Choosing a reputable exchange when buying cryptocurrencies is essential to ensure the safety of your funds and personal information. Before buying LUNC on any exchange, we recommend you research and compare the fees, security measures, and user reviews of different exchanges to find the one that best suits your needs. Once you choose an exchange, you can create an account, complete the necessary verification steps, and deposit funds to buy LUNC.
Where to buy WLUNA
WLUNA is listed on Uniswap V3, Cronaswap, and Saitaswap. You can also buy Wrapped LUNA Classic on Coinbase Wallet, not the exchange. Coinbase Wallet is a self-custody wallet that allows you to purchase Wrapped LUNA Classic using Ethereum (ETH). To buy Wrapped LUNA Classic using Coinbase Wallet, you must download the Coinbase Wallet app or browser extension and follow the steps to set up your account and securely store your recovery phrase. Once you have added ETH to your Coinbase Wallet, you can swap your ETH for Wrapped LUNA Classic in the app or browser extension. Choosing a reputable exchange or wallet when buying cryptocurrencies is essential to ensure the safety of your funds and personal information.
Supported wallets
Ledger Nano S/X: The Ledger Nano S and Nano X are popular hardware wallets supporting LUNC and WLUNA. These wallets provide an extra layer of security by storing private keys offline.
Trezor: Trezor is another popular hardware wallet supporting LUNC and WLUNA. Like the Ledger, it stores private keys offline to keep them secure.
Trust Wallet: Trust Wallet is a mobile wallet supporting LUNC and WLUNA. It is available for iOS and Android devices and is an excellent option for users who prefer to manage their cryptocurrencies on their smartphones.
MetaMask: MetaMask is a popular browser extension wallet that supports WLUNA. You can use it with various web-based DeFi protocols, and it provides an easy-to-use interface for managing these tokens.
LUNC and WLUNA are readily available on various cryptocurrency exchanges, and you can store them in multiple wallets and other storage options. It’s essential to do your research and choose a reputable exchange or wallet that best fits your needs and preferences.
Conclusion
LUNC and WLUNA are tokens with different characteristics, benefits, and risks. Both tokens provide exposure to the Terra ecosystem and offer various opportunities for traders and investors. LUNC is a native token of the Terra Classic Protocol with higher exchange liquidity. On the other hand, WLUNA provides easy access to Ethereum-based DeFi protocols and yields farming opportunities. Investors should consider both tokens when looking for investments in the Terra ecosystem. It’s essential to do your research and understand the risks associated with any investment before deciding. Ultimately, your token choice depends on your preferences and risk tolerance.
