In addition to LUNA as the main currency, the Terra network also has the network’s main stablecoin, UST (Terra USD), that is used for value transfers, spending, or integration with DeFi.
UST is classified as an Algorithmic Stablecoin, unlike USDT or USDC that is based on Ethereum, because UST is not backed by the dollar, but uses smart contracts to control the supply of the token to balance the value of UST closest to the dollar.
While UST has a stable value, LUNA fluctuates depending on market demand-supply. Both of them work together and balance each other. Firstly, in order to create (Mint) UST, the user needs to burn LUNA. Another one is trading the LUNA/UST pair which also helped bring the value of UST as close as possible to 1 dollar.
Not only is UST, but Terra also has stablecoins that have value close to other fiat currencies such as Terra JPY, Terra CNY, Terra EUR, and Terra GBP.