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DeFi Category grows strongly in Terra ecosystem (Nov 2021)

Publish by Nhung Tran at 18 November 2021

In the past few weeks, we had seen such a huge growth of Terra with many indicators (TVL, market cap, price,..) reaching a new ATH. In addition, the ecosystem also had many important updates. If you want to keep pace with the fast movement of Terra, you should not miss this “Terra Panorama” series, where both news and insights of Terra will be discussed thoroughly.

More sources of updated information for LUNAtics:

Terra Ecosystem Overview

Important Updates

A new proposal to use $3M LUNA as the liquidity mining incentive for UST pools has been posted. LUNA incentives will be distributed to UST pools across different apps on various blockchains. The goal of this is to boost liquidity for UST on other chains, and strengthen the position of UST as a leading stablecoin. This incentive program is expected to last for 3 months before being re-evaluated.

Wormhole Bridge now supports Polygon. Up to this date, it has supported a total of 4 large blockchains: Ethereum, Binance Smart Chain, Solana, and Polygon. This promises a further expansion of the Terra ecosystem when there is capital inflow from other chains. Currently, the total TVL of this bridge has reached ~$600M, in which both UST and LUNA are in the top assets by total value.

Arrington XRP Capital announced “The Arrington Anchor Yield Fund” to support non-crypto native investors in accessing Anchor’s yield. There are 2 risks for lenders on Anchor: smart contract’s vulnerabilities and the “de-pegging” risk of UST. Crypto native investors can easily mitigate these risks by Ozone - an insurance protocol on Terra.

However, this method does not reach non-crypto native investors. Therefore, “The Arrington Anchor Yield Fund” is announced to serve this segment, which can aggressively expand the market of Anchor.

Grayscale added LUNA in “Assets Under Consideration”. Grayscale has successfully invested in many top digital assets (AAVE, SUSHI, UNI, SOL,...) so if LUNA is added to the portfolio of Grayscale, it can be seen as an additional proof for the potential of the Terra ecosystem.

New Dapps

Nexus Protocol (Yield farming protocol): The protocol has reached a TVL of more than $100M after 2 weeks by offering a high APR at ~200%.

Nexus Protocol: https://nexusprotocol.app/

Kujira (Liquidation Market): Users can now easily participate in liquidations, buying Anchor‘s collateral assets (bETH, bLUNA) at a discount.

Kujira: https://orca.kujira.app/

Highlight Numbers

The market cap of UST has increased dramatically after the proposal #44 to burn $90M LUNA to mint UST for Ozone. At the time of writing, UST has hit a new ATH at $6B.

UST market tcap

Another figure to show the hype of this ecosystem is the amount of staked LUNA. The chart below represents the significant increase in the staked supply of LUNA, which suggests the strong confidence of users in the ecosystem.

LUNA Staked Supply

Ecosystem Analysis

Stablecoin

The ultimate goal of UST is “mass adoption”, which means that anyone can use UST as a means of payment in their daily life. Therefore, UST does not only emphasize expansion in the crypto world but also focuses on real-life applications of UST. And UST is getting closer to its goal when more payment apps are accepting UST and in the crypto world, UST has now expanded to many chains.

More payment apps announced to accept UST. In particular, NowPayment, Travala, and Alice are the 3 payment apps that have approved UST recently. With these apps, people can use UST to purchase goods and services, book flights/ hotels,... We can see that UST is still following its mission to serve the daily payment needs of people, heading for the mass adoption of UST.

UST rapidly expands to other chains. UST is now available in many dapps across chains: 3 new UST pools are now live on Uniswap, UST can be used as the collateral to mint MIM on Abracadabra, and Osmosis announced dual incentives for the UST/OSM pair,... Moreover, there is a hint that UST will be on Fantom soon. Together with the expansion in the real world, UST also shows dynamic growth in the crypto world by having its supply increased on more chains.

AMM

Loop Finance can now be tracked on DeFi Llama. Compared to Terraswap, Loop Finance offers more utilities as an AMM DEX such as farming, staking,...but the TVL of Loop Finance is only equal to ~0.7% of that of Terrawap. Compared to similar DEXs on other blockchains, Loop Finance still has lots of space to grow so we can follow this AMM and see how it will perform.

Comparison between AMMs of blockchain. Source: Terrians

One more AMM to look for is Astroport, an AMM protocol expected to take over the leading position of Terraswap. This AMM DEX is planned to launch this November so we should follow this event to see whether there will be a change in the AMM sector’s structure on Terra.

Astroport Overview. Source: Coin98 Insights

Lending

The TVL of Anchor has surpassed $5B and it is still the leading protocol in the whole ecosystem. In addition, besides taking part in common activities on Anchor (saving, borrowing,...), users can now easily join the liquidation market of this protocol. This is facilitated by Kujira, the protocol I mentioned above. By this, users can buy assets at a discount while the liquidated collateral will be settled more quickly.

NFT

Under the context that the whole ecosystem continuously reached new ATH, the NFT sector on Terra also has no sign of cooling down. Many new events are announced with the majority of them being minting events on Random Earth. If you want to check the upcoming events on Random Earth, you can check them out here.

However, the majority of NFTs on Terra are now collectibles, which means that they do not have many use cases other than trading. With the support from Hashed, Terra may see more diversifications and use cases for NFTs in the near future to attract more users.

Terra upcoming events. Source: Terrians

Wallet

Terra is now supported by up to 8 wallets. In this sector, Terra Station is undoubtedly the leading wallet as it allows users to easily take part in on-chain activities (staking, voting,…) on Terra.

However, in terms of scalability, Terra Station is less competitive than other multi-chain wallets such as Coin98 Wallet, Trust,… when it supports the Terra blockchain only. If these multi-chain wallets can integrate on-chain activities on Terra like Terra Station, there is a high chance that they will outperform Terra Station soon.

Wallet support Terra. Source: Terrians

Conclusion

To sum up, here are some highlights of the Terra ecosystem recently:

  • The whole ecosystem is recording tremendous growth, continuously reaching ATH in many indicators.
  • UST expansion is significant in terms of both the market cap and liquidity of other chains.
  • The AMM sector on Terra may witness a change in the leading position soon.

If there are any questions, please feel free to comment below or join Coin98 Community for further discussions about Crypto!

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Nhung Tran

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