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Terra's native token, LUNA, is used to stabilize the price of the protocol's stablecoins. LUNA holders are also able to submit and vote on governance proposals.
Luna represents mining power in the Terra PoS network. Luna also serves as the most immediate defense against Terra price fluctuations. The system uses Luna to make the price for Terra by agreeing to be counter-party to anyone looking to swap Terra and Luna at Terraโs target exchange rate.
โข When TerraSDRโs price < 1 SDR, users and arbitragers can send 1 TerraSDR to the system and receive 1 SDRโs worth of Luna.
โข When TerraSDRโs price > 1 SDR, users and arbitragers can send 1 SDRโs worth of Luna to the system and receive 1 TerraSDR.