Terra’s private stake, LUNA, was one of the best performing cryptocurrencies in 2021 with returns of over 13,000%. Terra has also surpassed Binance Smart Chain (BSC) in terms of total locked value by $17.62 billion, making it the second largest DeFi network behind Ethereum.
Much of this growth is due to the Terra ecosystem, as the developer community is constantly building decentralized applications on top of Terra. But it might surprise you to know that before hundreds of apps were built on Terra, there were only two in early 2021 – Mirror Protocol and Chai.
Mirror allows users to create synthetic assets that mimic the price behavior of traditional and digital financial assets. Traders use Mirror to access these markets without owning or owning the underlying asset. Chai, on the other hand, is a payment app that operates in South Korea with more than 2.5 million users. These applications are created based on real tools that provide users with practical advantages and encourage the use of cryptocurrency.
The third major application, the Anchor Protocol, launched on the mainnet in March 2021, but it quickly became a popular protocol for decentralized finance (DeFi) crops. Anchor is designed to leverage Terra’s stablecoin, TerraUSD (UST), by opening LUNA or Ether (ETH). So far, the total value of Anchor’s locked security has risen to $5.2 billion, according to the official website, which is already a 4.375% change from the first day of launch.
The growth in security coincides with the expansion of the user base and increases by approximately 440 users per day, which is growing almost three times faster than the mirror. The increase in the user base can also grow along with the gradual increase in Terra transactions.
Increase in the number of orders
After major applications in the Terra ecosystem, several new projects have appeared in the categories of games, metaverse, DeFi, non-fungible tokens and many more. There are also several inter-chain communication protocols that allow Terra assets to freely transfer to other chains. For example, the Solana bridge protocol facilitates the transfer of Wormhole v2 assets across Terra, Solana, Ethereum, BSC, Polygon, Avalanche, and Oasis. This is made possible due to the update of the Columbus 5 Home Network by Tera.
Developers also created projects using the main Terra applications as a basis. An example of this is Orion Money, which uses the Anchor protocol to generate higher returns for other stablecoins such as Tether (USDT), Binance USD (BUSD), USD Coin (USDC) and Dai. He does this with EthAnchor, converting his stack coins into rolled TerraUSD (wUST) and then fetching them into Anchor, bringing the APY up to 20%.
Why did Tira arise?
In July 2021, Terraform Labs, the company behind the Terra blockchain, raised $150 million from multiple investors including Arrington Capital, Lightspeed Venture Partners and Pantera Capital. The money was for incubation projects on the Terra, which likely spurred further development.
However, Du Kwon, founder and CEO of Terraform Labs, believes there is something more fundamental. In an interview, Kwon said that what has fueled Terra’s strong community is rooted in the concept of decentralized money that Terra can achieve with its algorithmically stable coins.
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Terra owns a family of stablecoins linked to different fiat currencies such as the US dollar, the euro, and the Korean won. It also has a major stablecoin called TerraSDR which is linked to the Special Drawing Rights of the International Monetary Fund. The price stability of these stablecoins like floor treasuries is mathematically maintained and users are encouraged to respect the stablecoin through arbitrage opportunities.
The algorithm did just that, holding the US dollar stick when it deviated from it. This design makes Terra Stack coins more decentralized and potentially eliminates regulatory issues that plague other stack coins. And according to Kwon, that’s exactly what the Terra community is excited about.
In essence, Terra requires these stablecoins for its applications, which increases their overall use, making them more attractive to users and creating a more robust ecosystem.
Tera, next year
The $150 million raised by Terraform Labs last year is just the first round of funds earmarked to support Terra projects.