Terra Ecosystem is one of the few ecosystems that does not follow popular trends such as AMM, lending, meme coins, and so on. So, what is Terra’s plan, and will it be successful? We frequently obtain information from the article below.
What is the Terra blockchain?
Terra blockchain was founded by Terraform Labs based in Korea, and supported by Terra Alliance. Terraform Labs was founded in 2018 by Daniel Shin and Do Kwon, a company with a background in e-commerce and finance.
Terra Blockchain is built on Cosmos’ CosmWasm and launched in April 2019, with the first application being TerraKRW ($KRW) – a 1:1 pegged stablecoin with Korean Won, used in payments.
On-chain Metrics on Terra
LUNA: Terra’s governance token is LUNA, around it are stablecoins and the most popular today is UST
- Market Cap: $28,988,125,669
- Circulating Supply: 343,323,333
- Total Supply: 726,235,681
- FDV: $84,433,893,137
- Rank: #8
- ATH/ATL Price: $119.12/$0.12
- LUNA list exchange: Binance, Okex, Huobi, Kucoin,…
- Blockchain Terra:
- TPS: 10,000 TPS
- Node: 130
- Transaction Fee: $0.1
- Total Addresses: 3,991,823
- Total Value Locked: $20.5 billion
- Total Stake: 41.9%
Backers/Investors: In addition to holdings from major investors such as Coinbase Venture, and Binance Lab, Terra continued to have many subsequent capital calls with huge amounts of up to $1B.
The development process in the Terra ecosystem
- October 3, 2020: the project launches the Columbus 4 upgrade, with perhaps the most important update allowing users to write their own Smart contracts and increasing transparency and decentralization for Terra Blockchain.
- 04/2021: Terra launches Anchor Protocol, a lending project with the highest fixed interest rate threshold of 20%. This can be said to be the first step in the Terra ecosystem when Anchor is both the first lending protocol and a place for projects cooperating with Anchor to generate large and stable profits.
- May 25, 20201: DeFi Connected Hackathon – Terra’s hackathon was successfully held, bringing to the community many potential projects such as Orion Money, Apollo DAO,…
- September 30, 2021: The most important update ever: Columbus 5, which includes:
- Burn the entire Seigniorage
- Update Stargate
- IBC integration
- Launch of Ozone insurance protocol
- Split swap through Oracle
- And more projects are launched.
Outstanding features of the Terra ecosystem.
Terra is focusing on using its Stablecoins as much as possible, particularly in practical applications.
Terra has the Chai app in South Korea, which is a popular payments app built on Terra that has over 2 million users and is still growing.
Travala, a travel booking service similar to Booking that offers UST as a payment currency, is another option.
These features are difficult to notice in other Blockchains, which are always competing with less sustainable programs such as Yield Farming or a succession of Fork initiatives that arose during the Defi boom but failed to produce any exceptional products.
Pieces of the Terra ecosystem
Terra ecosystem currently has more than 150 projects under construction on which the main areas include: Stablecoins, AMM DEX, Lending, IDO Platform, NFT Market, Gaming, and many other contents. In this article, I only focus on the main puzzle pieces such as Stablecoin, Payment, Lending, Synthetic, NFT, IDO Platform, and Charity.
First and foremost, Terra’s first product, Stablecoin, is currently in development. Terra also offers several stablecoins that are pegged to various countries’ currencies, in addition to UST. However, UST is the only operational stablecoin on Terra.
Terra’s strategies for UST alone are to concentrate resources on UST. This increases UST’s power and accelerates the ecosystem’s growth.
Proposition #44, with its breakthrough of more than 88 million LUNA to mint UST to build the entire ecosystem, is a huge milestone for $USR. And it’s forcing UST’s capitalization to skyrocket.
This is an extremely developed piece on Terra to encourage people to use Stablecoins, especially UST. In addition, Payment projects are also associated with Anchor, and Mirro to provide more products to users.
Some typical projects such as Chai, Memepay, Pylon Protocol, Subbera, Spaar,…
- Loop Markets: Multichain Dex on Terra
- Terraswap: AMM/Dex on Terra, taking the idea of Uniswap combined with smart contracts to trade on-chain assets of the Terra ecosystem
- Astroport: AMM on Terra acts as a transaction between Anchor, Mirror and the larger Terra ecosystem
- Local Terra: P2P marketplace for Terra properties
Lending & Borrowing
Anchor is perhaps the most unique protocol in the lending industry ever. With a fixed lending interest rate of 20%, many users come to the Terra ecosystem just for this interest. Specifically, nearly 17b UST are on Anchor, representing more than 90% of the total UST supply.
This is also contributed by projects collaborating with Anchor, making UST more focused on Anchor.
With such a fixed rate of return, the profit from Borrow is much lower than the cost of Lending, Anchor had to be funded twice from TFL to increase reserves, in order to pay interest to User. This is a huge problem for Anchor.
To solve the above problem, Anchor has changed the interest rate anchoring mechanism. Specifically, the lending interest rate will decrease by 1.5% per month if that month Anchor has a loss. This could be a big improvement in Anchor’s performance and I expect it to be around 7% in the future. This is the general interest rate of the whole industry.
Next are Edge Protocol and Mars Protocol, these are two extremely large and potential projects in the Lending array on Terra, in which:
- Mars Protocol is inclined towards Credit.
- Edge Protocol will play a “multipurpose” role with many types of pools for users.
On Terra, Mirro represents the Synthetics puzzle component. In May, Mirror Protocol’s TVL surpassed $2 billion, putting the project in contention for a spot among the top ten TVLs compiled by defillama.com. And that’s the extent of Mirror Protocol’s capabilities. TVL has been steadily declining since May 2021.
- Pylon Protocol
LaunchPAD projects on Terra are not outstanding
NFT was picked up on Terra around August 2021 and officially exploded from about October 2021 until now. Simple NFT projects are appearing more and more with high output layers.
Is a unique field on Terra-Angel Protocol, which took 5th place in the DeFi Connected Hackathon, which I described at the start of the essay.
The Terra Charity Alliance was established as a result of the development of this puzzle piece from the fact that there are many projects prepared to share a profit for charity.
Terra ecosystem growth forecast
- From the beginning of 2021 to Q3-2021
- Apply UST to Anchor is the main
- Development of NFT/Gaming
- Late 2021 – early 2022: establish two funds for Terra development
- Project Dawn: Fund comes from Terraform Labs’ “out-of-pocket”, worth 50M $LUNA (~$150M at time of announcement), used to build infrastructure.
- Luna Foundation Guard (LFG): Fund used to secure UST’s peg, build infrastructure, worth 50M $LUNA. Therefore, UST is heavily guaranteed to hold Peg.
- Besides accelerating the application of UST into other ecosystems, increasing Hackathon and collaborating with other projects outside the Terra ecosystem.
- Also create an alliance of new Algth Stablecoins (FRAX) on Curve to eliminate competitors, especially $DAI.
So far, Terra has focused on protecting and applying UST very aggressively to bring this stablecoin everywhere. In my opinion, these steps are completely reasonable as Terra always listens to users and investors to adjust its direction to suit the new situation of the project.
With past achievements, I believe that Terra is fully capable of achieving its goal in 2022. Focusing on new strategies such as applying and protecting UST to create a trust for investors private and users. Besides, important pieces on Terra still play an important role in the development of the entire ecosystem.
Find more information about Terra
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