The new project of a Korean e-commerce company TMON aims at creating blockchain-based digital payment system. The solution is expected to lower the fees and help small retailers compete against industry giants.
The dichotomy between cryptocurrencies and fiat money is no longer the dominant concept. Conversely, the weaknesses of one system can be eliminated by the qualities of the other one. A great example of this idea is the concept of a stablecoin ‒ a cryptocurrency that tracks the price of another asset, usually fiat currencies. A new player is about to join the market as leading Korean e-commerce company TMON closed its seed funding round raising $32 million for its stablecoin Terra.
TMON, also known as Ticket Monster, is a startup unicorn that raised $1.4 billion in April 2017. At the moment this company is one of the undeniable leaders of the Korean e-commerce market. The new project of TMON is a proprietary stablecoin Terra. The idea is not new: TrustToken, Reserve, Stronghold are just a few examples of stablecoins that have attracted influential investors. Even though deploying a stablecoin seems to be a trendy decision, the Terra project envisages an essential difference. The new stablecoin comes with an existing user base.
The e-commerce market is known for the incredible choice, low prices, and incredible competition. Such giants as Alibaba or Amazon make it extremely difficult to survive in the business. But TMON is not afraid of the influential corporations as the company uses the Terra project to create the crypto-based community. The Terra Alliance will unite e-commerce companies that are willing to use the new stablecoin in their businesses. Even though the project is still in its early stage, the total sales of the first members of the alliance already exceed $25 billion. The list of the early supporters includes such names as Woowa Brothers, Qoo10, Carousell, Pomelo and TIKI.
The idea of the Terra stablecoin has been appreciated not only by the e-commerce market but by investors. The total $32 million funding has been achieved because of the number of notable crypto investors. Polychain Capital, FBG Capital, Hashed, 1kx, Kenetic Capital, Arrington XRP, Binance Labs have invested into the Terra project. The head of Binance Labs Ella Zhang commented on this seed funding round: “While we see many stablecoins coming out, Terra’s journey is especially meaningful as they are designing one of the few price-stable protocols with existing, working and strong go-to-market strategy and usage.”
The Terra project includes two different coins: terra and luna. The investors got 40% of all the luna tokens that are to be issued. This coin works as collateral on the network and stabilizes the price to keep it tracked to a fiat currency. Owners of the luna token benefit from every transaction held on the network as they get transaction fee. The other token called terra is the one to be directly used in everyday payments.
The two-token system allows all the members of the Terra Alliance to reward users with discounts for paying in cryptocurrency. The switch to the cryptos is an important issue for e-commerce business as it may replace the credit cards. Credit cards are convenient for most customers, however, retailers tend to lose significant amounts on credit card fees. The new blockchain-based economy powered by a less volatile stable token may become the perfect solution for the e-commerce shere.
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