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Lesson 4

• 15 mins

Powering Real Life Applications

Terra is powered by Tendermint BFT consensus, using a dPos-Like scheme driven by a set of 130 top validators. This efficient consensus model enables batches of transactions to occur in only 6 seconds (a fraction compared to the time it takes for Bitcoin and Ethereum).

This lesson gives a brief overview of two use cases of Terra powering real world applications.

What is Chai? 

CHAI is a korean mobile payment service similar to paypal. With the app downloaded, a user can connect their bank account and make online payments simple and convenient.

Image credit: CHAI

All the way back in the summer of 2019, Terra proudly announced the breakthrough partnership with CHAI.

At the time, CHAI had recently gone live on TMON — one of the largest eCommerce platforms in the world with 10 million users and $3.5 billion in gross merchandise value. This partnership made CHAI available to all of Terra’s eCommerce partners.

Equally exciting, CHAI was then partnered with 15 of the largest local banks to facilitate easy on- and off-ramping. This meant Terra could potentially tap into a large portion of the Korean real-world economy.

For Terra, CHAI provides a payment gateway with merchants in fiat — where they can access the masses. For CHAI, Terra offers them a doorway to the blockchain — where they can access quicker transactions at a fraction of the cost. Since, traditionally, merchants like CHAI have been subject to 2–3% digital payment fees, the blockchain now significantly reduces their costs.

What is Chai’s role in the Terra Blockchain ecosystem?

The partnership with CHAI represents precisely Terra’s mission. It isn’t trying to reinvent the wheel, so to speak. Instead, it wants to present blockchain technology’s utility to the masses and let them run with it.

Rather than wasting time developing their own mobile payment gateway, Terra is letting the industry expert handle what they do best while Terra further develops blockchain compatibility.

Now, every payment made through CHAI is transacted in UST behind the scenes. Let’s look at an example:

Jimmy is a CHAI user. He has a CHAI debit card and, like 5% of the Korean population, he frequently transacts using his CHAI card.

When Jimmy goes to the store, he doesn’t know it, but he is transacting in KRT (Terra’s stablecoin pegged to the Korean won — its national currency).

One afternoon, Jimmy buys a loaf of bread at the supermarket and pays with his CHAI card. It costs 1,000 KRW (roughly equivalent to 1 USD). Though Jimmy doesn’t see the blockchain at work, as soon as he swipes his card, 1,000 KRT (stablecoin) is transacted in the backend and sent to the merchant as KRW.

When this transaction happens in the blockchain, several things happen according to Terra’s tokenomics:

1. 1,000 KRT (~ $1) is purchased.

2. ~ $1 worth of LUNA is burned.

3. LUNA circulating supply shrinks and therefore becomes more valuable.

As you can see, every transaction on the blockchain makes the blockchain richer. And, thus, makes investors richer.

How does Terra work with Chai?

CHAI is a consumer payment app that works like any other on the front end. Behind the scenes, though, it utilizes stablecoins minted on the Terra blockchain which is a drastic departure from any other payment app. 

  1. Users fill their wallets with TerraKRW from their (fiat) KRW bank accounts. CHAI buys KRT on the users’ behalf as it withdraws from the account.
  2. CHAI creates and manages a Terra wallet for the customer behind the scenes. The front end interface does not actively provide crypto information to the user, with the experience being more like that of a Paypal or other consumer fiat wallets.
  3. When users buy something at a participating merchant, the transaction is verified on the terra blockchain.
  4. The merchant gets paid in KRT, with certain benefits added if the merchant holds KRT rather than cashes out immediately. The fee for the merchant is considerably lower than a typical credit/debit card processing fee, closer to 0.05% than the 2-3% range of traditional payment.

What is Memepay? 

Memepay is a payment system Terra launched in Mongolia’s capital city of Ulaanbaatar to launch instant money transfer and lending services. MemePay enables instant stablecoin payments at cabs, gas stations, and department stores. It will also allow users to easily send and receive payments from friends. The app, which has attracted 50,000 users since its March launch, now features the Terra-backed memePay payment service as well.

Image credit: memeChat

Memepay + Terra

The partnership will let users transact with local merchants, drivers and other users’ digital wallets in Terra MNT stablecoins, tied 1:1 with the Mongolian currency (known as the tugrik). Some merchants have already agreed to use the service, including a taxi company and a department store. 

Terra and memeChat designed the system to need no additional infrastructure. Instead, merchants can settle payments in fiat or stablecoin within the memeChat app.

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