Terra’s Moat: Ecosystem
written by @speicherx
On a space with udiwertheimer earlier this week, Do Kwon mentioned that: ‘Rather than seeing the Bitcoin reserves for UST as stability, I see it as a valuable investment to connect communities. In order to get Terra to be the largest stable plan, the principal asset to help us get there would be Bitcoin— it is neutral, and the hardest.’
Following that, LFG Org started its movements in purchasing 3 billion worth of Bitcoin to back UST in reserves.
Here are some key pointers:
- Acting as a safeguard during extreme volatility, UST will be able to be redeemed for BTC, rather than LUNA — to prevent death spirals. It will still act as an algostable, but now split between LUNA and BTC.
- Smart Contract to be built, controlled by Terra governance that adds in a stability augmentation to the core mechanism where you can burn UST for BTC at close to a 1:1 ratio (premium). LUNA will still continue to burn to create UST as usual.
Arbitrages example: if UST > 1, swap BTC to restore the peg by increasing circulating supply of UST, which results in LUNA burning. Do note that a portion of UST seigniorage in future will also go towards market buys of BTC.
Moving ahead, let’s see what else happened on Terra the past few days:
1) Anchor turns 1 — with a few revamps to celebrate further growth
- xAnchor starts off with Avalanche Network
xAnchor will bring Anchor’s functionalities to other blockchains aside from its native Terra. By bridging the cross-chain experience, users can soon interact with Anchor contracts on the Avalanche network directly — or maybe Solana, BNB & more in future.
Do note that as xAnchor builds on Wormhole, so it only accepts Wormhole wrapped UST.
- Anchor ceases $ANC rewards, no dual rewards on Astro
The change highlighted above started in effect from the March of 17th, Thursday, at 08:07:39 UTC.
Initially, the token rewards were used to bootstrap Anchor’s liquidity on exchanges. For the long term value of the Anchor token, such a move may mean that it’d be more beneficial for holders due to their model changes and also because of the heavy dilution from farming/dumping given lack of current utility.
- sAVAX, bATOM collateral types
sAVAX will launch as an alternative collateral type to join the list of borrowing assets on Anchor, alongside bLUNA and bETH.
Kujira will allow users to place bids for sAVAX on ORCA with aUST the moment it goes live tomorrow. A total of 100k sKUJI will go to bidders who do so between launch~12pm UTC on the 23rd of March.
bATOM is also now available on Testnet, we may well see its implementation finally sometime this month.
- Prop 20: Dynamic Earn Rate Proposal
There is some considerable debate between ‘YES’ and ‘NO’ for this prop so please do not take my writing as governance advice.
This prop aims to ‘reconcile the variable differences between deposit capital and borrower collateral inflows methodically, by using 1) the period of time for which to measure the delta change of the yield reserve and 2) the delta threshold which if surpassed in this time period would adjust the rate up or down.’
The team then derived at the following formula that runs every month:(% Earn Rate Change) = min( abs(1.5%, ((YR % Change) — 3%)) ), which is limited to 1.5% per period in changes to total Earn Rate (Increase/Decrease).
Quoting the example they gave,
If the yield reserve increased by 5% in the period of one month: X = min( abs(1.5%, (5% — 3%))) = min(1.5%, 2%) = 1.5%. The earn rate would increase by 1.5%, conversely, if it dropped by 5% the earn rate would drop by 1.5%.
However, due to its marketing prowess for normies and the other benefits it carries from the high savings yield rates — many are unhappy with the potential sudden changes.
As a side note from the same Twitter Space highlighted in the intro, Do Kwon also mentioned: ‘The main goal of Anchor was to modulate & flatten volatility in yield (better rates) over a longer period of time. The tradeoffs are the slower changes & hits in the reserves short-term, but the priority is gaining reliability & trust from the users.’
View more details here:
- Raise bETH LTV
From Poll-15, the maximum Loan-to-Value ratio for bLuna on Anchor was raised to 80%. It only makes sense to do the same for bETH now especially with potential changes surrounding Prop 20 on the Dynamic Earn Rate.
2) Jinkou — First J-Terminal live in Singapore!
I personally had the amazing chance to meet the brains behind Jinkou just a few days back. When I first heard of Jinkou, I was pleased to see that it was one of the first few projects that was pledging to increase mass adoption for primarily UST in the SEA region — with builders none other than the local citizens themselves!
They aim to integrate the concept of payment with what you may see with Venmo and PayPal across merchants, but this time with crypto. Where else to first launch where it all began? Their very first J-Terminal will be live at Terraform Labs’s Headquarters.
3) Terra Bridge — Avalanche & Fantom
Transfers between Terra and the other two ecosystems are now powered by Axelar on https://bridge.terra.money!
I had a really pleasant experience with transferring my UST to Avalanche. However, do take note that the liquidity on Fantom for Axelar Wrapped UST is low now, so if you were to bridge from Terra <> Fantom, Wormhole would be the better choice.
4) Terra’s launch on Thorchain — RUNE
You may have seen RUNE pop up a few times here and there on your timeline recently — but that’s largely because ‘RUNE’ has always been seen as the IBC cousin of ‘LUNA’, of which they seem to have finally begun kickstarting developments.
LUNAtics will have access e.g staking LUNA and UST on THORChain next week!
5) ZigZag — 25M UST added to market makers
With the passing of Community Spend Proposal 323, 25 million UST has been added to the ZigZag market makers. Going full decentralized: all liquidity from USDC and USDT pairs have also been removed except their stable swaps e.g UST/USDC and UST/USDT.
The team will now also fully focus on UST pairs.
Read details on the (passed) proposal here:
6) Bitrue x UST — Base Currency Listing
Aside from ZigZag, Bitrue also announced UST as their new base currency. There are now already 71 trading pairs live to kick off the launch, such as Bitcoin, GALA, SHIB and more.
7) UST is now available on Aave
After months of proposals and chatter, it finally went live on the Ethereum market!
8) Illiquidly — Trade & Swap NFTs
Trade Illiquidly with trustless, permissionless escrow contracts. The project just recently posted a thread breakdown on their upcoming feature, check it out here: https://twitter.com/illiquidly_NFT
Users will be able to trade singular/multiple NFTs for other NFTs, with an additional option to also add liquid assets (CW20). This means that pLUNA will have additional utility now, kek.
9) Blockchain gaming platform C2X on Terra Raises $25M
The platform will include “token economics, NFT marketplaces and a wallet.’’
Do note that users can now also use the Terra Station mobile app with Ledger Nano X via Bluetooth.
That’s all for this week!
Feel free to add the TeFi calendar into your Google Calendar here: https://www.speicherx.com/tefi-calendar
I’m still tracking Terra NFTs daily, so minting dates are also added.
Feel free to join any of the Terra community groups I have created:
Singaporeans: https://t.me/sglunatics
Australians: https://t.me/australianlunatics
International (Chinese): https://t.me/terrachinesegroup
NFT: https://t.me/nftsinterra
