Home CryptocurrencyAltcoin The collapse of the Terra blockchain ecosystem will force a migration of talent

The collapse of the Terra blockchain ecosystem will force a migration of talent

by SuperiorInvest

At the peak of the 2022 bull market, the Terra ecosystem thrived on talent and innovation. Native token Terra blockchain made it into the top 10 cryptocurrencies by total market capitalization. The logs were building another iteration of a supercycle that seemed never to end.

Terraform Labs created Terra in the middle of the 2018 crypto market crash and built it in a bear market. The main appeal and claim to fame of the Terra ecosystem comes from their offering of the best returns in decentralized finance (DeFi) with up to 20% return on its stablecoin through the Anchor protocol.

As of March 2022, Terra had a total of 73 projects built in the ecosystem. The team’s ambition was to launch at least 87 additional projects by the end of the year. Terra was becoming a serious competitor to BNB Chain, Solana, Cardano, Avalanche and other layer 1 blockchain infrastructure in their quest to take market share from the current leader, Ethereum.

Being a blockchain built on the Cosmos network meant that Terra could scale and interoperate with other blockchains via the Interblockchain Communication Protocol (IBC). Bull market hype attracted liquidity and Terra benefited from user appetite for new market opportunities.

Terra reached more than 90% of the Total Locked Value (TVL) of all Cosmos blockchains in May 2022 with more than $21 billion in assets.

That same month of May will be remembered as the collapse of Terra. The Terra Token was supposed to hold the Terraina Algorithmic Stablecoin pin – until it didn’t. Billions of dollars were wiped off the market in just a few days and the thriving ecosystem that Terra had built was left for dead.

Related: What happened? The Terra debacle exposes the flaws plaguing the crypto industry

The community acted quickly. Although there was no attempt to revive the Terra token and its failed stablecoin peg mechanism, it was try to compensate those affected fall, not in full, but rather as a symbolic gesture of how resilient the Web3 community can be.

There are now three different trading tokens on the market to consider: Terra (LUNA) the new networks token, Luna Classic (LUNC) which is how the token was rebranded after the new network was created, and the failed TerraUSD Classic (USTC ) algorithmic stablecoin formerly known as UST.

Currently, LUNC has a market cap of $2.8 billion, while LUNA has just over $303 million. The new Terra blockchain has a lower market cap than the failed USTC at $415 million.

Where did the talent go after Terra collapsed?

Suddenly, and with no time to prepare, those projects that decided to build on Terra were faced with a difficult decision that had never happened before on such a scale and severity.

Through Terra 2.0, an attempt was made to offset the projects by providing much-needed liquidity to the affected. The grants were distributed on June 17, with half of the tokens available on that date and the rest remaining locked for three to six months of linear depositing.

For projects that remain, the Terra 2.0 Emergency Builder Allocation program will unlock a new round of tokens for 35 projects. On September 17, Neptun finance will receive the largest amount of LUNA worth almost $185,000.

Linear award data for the Terra 2.0 Emergency Builder Allocation program. Source: Coinhall

The final batch of 15 projects for this program will receive tokens on December 17th, with Astroport unlocking the most with 1.25 million USD worth of LUNA and Leap Wallet receiving the least amount from this batch with LUNA worth USD 235,000 at the current market price.

Since Terra was built from the Cosmos network, it was a natural choice to migrate some protocols. The IBC architecture allowed projects to stay in this ecosystem and move easily to the new blockchain.

Not every project found the idea of ​​staying in Cosmos appealing as other blockchains were starting up using development grants to attract talent and new projects to their network.

With the Ethereum Merge just around the corner, Ethereum Virtual Machine (EVM) compatible blockchains have surpassed others.

Polygon, Ethereum’s sidechain, has done just that more than 48 projects on board from the Terra ecosystem through Polygon’s multi-million dollar Terra Developer Fund. An effective strategy for attracting talent that was unexpectedly available when Terra collapsed in May.

BNB Chain, an EVM-compatible blockchain created by Binance, has also pledged providing investment and project support which are considered migrating from the Terra ecosystem from the BNB Chain Fund, which has $1 billion in investments and grants to distribute among projects deployed in the BNB Chain ecosystem.

Other networks like VeChain and Kadena have unsuccessfully tried to capitalize on talent migration.

Building a new chapter for surviving projects

Many great projects and talented people in the ecosystem were pushing progress and had good intentions in what they were building on Terra. From the ashes of the debacle, these talented individuals will continue to build and create tools to improve the space as a whole.

There are currently six projects developing the new Terra ecosystem with just over $23 million TVL at the time of writing.

Terra 2 TVL ranking. Source: DefiLlama

Chauncey St. John, the founder of Angel Protocol, told Cointelegraph: “We lost a huge chunk of our coffers, but we live to fight another day and it will be relaunched in the next few weeks,” adding:

“Angel Protocol has learned the importance of diversification and built on the fact that as a multi-chain entity we can do more good. As such, we are launching both IBC and EVM compatible hubs.”

Lido, a leading liquid staking derivative protocol known for its Ethereum liquid staking market dominance, also offered its services to those LUNA token holders who wanted to stake with them and stay liquid. Following the collapse of Terra, the protocol decided to end its operations around LUNA and set in motion the process of decommissioning this liquid staking token. There is currently no known interest from Lido in supporting Terra 2.0 liquid betting tokens.

Source Link

Related Posts

%d bloggers like this: