Top Terra ($LUNA) Projects with Real Traction to Watch in 2022
Part 1 of my deep dive into Terra ($LUNA)
Welcome to the 334 newly Altcoin Evolutionists who have joined us since last issue!
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Hi internet frens👋 ,
We’re so close to 1000 total subscribers and followers across Twitter, YouTube and Substack so thank you for being here. My goal for 2022 is to achieve 10,000 subscribers on this newsletter so getting to even 1,000 across the 3 platforms will be a great milestone to hit so early on.
Anyway onto todays topic, Terra.
I really came into this not having much knowledge of the ecosystem or the technology; Flare (post) and Near (post), I have looked at before and even been part of the team that won a Near Hackathon a couple of years back.
The most interesting part of Terra for me is that due to it's native stablecoin mechanism, the ecosystem is ripe for DeFi projects to spring up, so much so that @DelphiCapital is a leading the acceleration of many exciting projects.
When a VC goes super deep on a specific tech system is definitely worth a further investigation.
And without further ado then let’s do this…
Terra ($LUNA) Ecosystem Analysis
Part 1 of my Terra deep dive, part two coming soon… [link placeholder]
Intro
While not the biggest ecosystem, the total market cap of the projects building on the technology is somewhere around $40bn.
Just scrolling back through the full ecosystem maps the growth in the number of active projects has been impressive. From this in June 21 by @Terrians_:
To now this, as put together by @TerraLUNADaily (I make the number of projects ~90 from this map…)
Let's take a look at a few of them making real progress and some that show promise.
Mirror Protocol (@mirror_protocol )
a) What is it?
Mirror is the first of two protocols we will look at built and developed by Terraform Labs (the group who designed the Terra cryptocurrency).
It aims to create “synthetic assets” - which are effectively trackers that follow the price of equities. Mirror Assets (mAsstes) as they are called can be anything e.g. mTesla, will go up and down as Tesla does.
You can read more about synthetics here:
In this way Mirror protocol opens up the US equity market to investors globally - while a noble cause it is something that has got them into a fair bit of trouble with regulators…
b) Key Statistics
At it’s height the TVL in Mirror Protocol (as per defillama.com) was ~$2.15b, as of writing we have had a reduction to ~$850-950m depending on what measures you include.
In his great article found here @Remi_Teto of Real Vision the total mAsset market cap sits around $450m.
The combined statistics are significant which is why Mirror earns it’s place on our ones to watch for 2022.
c) Importance to the ecosystem
Apart from the yield from staking $MIR which I’ll cover at the end of the Anchor section, the Mirror Protocol will form a crucial pillar on which others will innovate. For example Mars Protocol (in the “honorable mentions” section further down) will allow users to collateralise their mAssets and borrow against them. While not a new concept building this on blockchain technology will allow anyone to get access to cash as and when they need it without jeopardizing the future returns for assets they hold onto.
The second reason why Mirror plays a key role is that Terra is focusing on mass adoption, and so having the hook of allowing people to invest in, what are seen as, “gold standard” US assets, will be a powerful incentive to draw new users onto the platform from around the world.
For those users who would rather have invest in something less risky, no fear, because Terra has a solution for you too… Anchor Protocol.
Anchor (@anchor_protocol)
a) What is it?
Anchor is a lending and savings protocol that leverages TerraUSD ($UST) as its deposits and borrowing currency.
Also developed by Terraform Labs, Anchor has it’s own token ($ANC) which acts as its governance token but also captures a portion of Anchor’s yield.
As a description of how this works I have looked at the Anchor Docs here
ANC is also used as incentives to bootstrap borrow demand and initial deposit rate stability. The protocol distributes ANC tokens every block to stablecoin borrowers, proportional to the amount borrowed.
Anchor takes a 10% protocol fee which is used to purchase ANC from TerraSwap (a DEX). ANC is then distributed as staking rewards. By doing this the value of the ANC token is linked proportionally to the assets under management within the protocol.
You can find out more about the protocol including it’s initial token distribution here
b) Key Statistics
With ~11b UST locked in the product and over 2b UST borrowed Anchor has significant staying power that will grow as more apps integrate it into their platform (more on this below).
The protocol is already generating significant fees on @terraswap_io as well.. $275k in the last 7 days, the second highest in that period.
c) Importance to the ecosystem
Anchor is important to Terra as a base to enable savings within the ecosystem. The protocol plays a key part when generating yield within Terra as shown in the diagram below, alongside Mirror Protocol as mentioned above.
Chai (chaipay.io)
a) What is it?
CHAI is a mobile payments network powered by Terra. It is like a Venmo / Paypal / Revolut + Stripe for SE Asia.
CHAI abstracts away the complicated blockchain rails it runs on giving end users a Web2 experience whilst saving them 60%+ on processing fees.
With Terra, CHAI can benefit from blockchain technology and collect transaction fees without having to deal with the conventional cryptocurrency on-ramp barriers…
b) Key Statistics
CHAI doesn’t have much public data but I was able to find the following:
CHAI currently processes $6 billion on behalf of over 2,200 merchants. Most recently, it launched in Vietnam and Thailand.
Additionally, it also operates an e-wallet in South Korea that connects to a gamified rewards platform for over 3 million users.
Article in Deal Street Asia
c) Importance to the ecosystem
CHAI is the first step towards Terra’s vision of bringing millions of users onto their blockchain. Because of Terra’s unique tokenomics (which I will cover more in my next post) every CHAI user that spends the equivalent of $1 (which is UST under the hood) will burn a dollar’s worth of Luna. Therefore every transaction across the app reduces the supply, helping the coin named after the moon, get closer to the moon.
Also with payments and savings built in users are likely to come to pay for stuff, see the rates on offer and move more money in. As Terra put it in July 2020:
Anchor + CHAI = Mass Adoption
Cool stuff huh?
Now onto more crypto native projects..
Astroport (@astroport_fi)
a) What is it?
Astroport is an innovative AMM on Terra. It offers multiple types of liquidity pools which gives much greater flexibility when choosing a LP strategy for any asset (and it’s impact on TVL shows… more below)
A governance token ($ASTRO) that will provide governable LP incentives and facilitate decentralization and community governance.
b) Key Statistics
Astroport sits in the top 50 TVL rankings having already amassed a TVL of around ~$1.15b (source: DeFi Llama) - not bad given it’s a month old…
TerraSwap sat alone for a long time as Luna’s AMM. The launch of Astroport at the very end of 2021 bought the party to a dramatic swap gobbling up 50% of the total swap count incredibly quickly as this graph shows:
The graph above is from this brilliant article by @sem1d5 which dives into the AMM dominance war in great detail and very much worth a read if you want to go deeper.
Interestingly, TVL on TerraSwap is down significantly and from the chart you can guess when Astroport was launched… Ouch.
However, one of @sem1d5’s findings were that a lot of new users were going to Terraswap primarily showing that it won’t be an easy battle for Astroport.
Astroport did tease the launch of their own reporting services last year although AFAIK it hasn’t launched yet so we will have to hold our breath and wait to really dive into the data.
c) Importance to the ecosystem
Liquidity is the lifeblood of DeFi applications and as such having multiple AMMs providing liquidity for different assets is key to any protocol’s success.
The battle for supremacy between the two AMMs (Terraswap and Astroport) and the respective TVLs can provide a key lesson in why giving users flexibility could be a winning strategy. However time will tell…
Pylon Protocol (@pylon_protocol)
a) What is it?
Pylon Protocol is a combination of a payments network and a launchpad for new projects. It is unique in the way the payments are made from a deposit:
Pylon Protocol allows users to make principal-protected deposits, which are then deposited onto Anchor to generate yields-based payouts for creators and platforms, in exchange for unlocking exclusive services or content offerings.
The draw for users is that they can access the product/content offerings & easily withdraw their initial deposit. For beneficiaries, the appeal is that of a stable income as a result of a min. lockup period & long-term relationships w/ their audience. Win-win situation.
Source: Medium
The diagram below goes into more detail and covers both sides of the protocol.
If, like me, it was hard to make sense of the above, here goes my explanation:
Tackling payments first; say you want to subscribe to a new service you would deposit UST into the Pylon Protocol. This deposit is then automatically converted into Anchor’s protocol, which currently provides ~20% APY. The yield generated from that deposit is then used to pay the subscriptions. Therefore, in theory, when you want to end your subscription you would get your whole deposit back…
Pylon’s launchpad mechanism acts using the same principles. A start-up creates a contract which allows depositors to put money in to their vault. The deposits start yielding 20% APY paid to the start-up, which can then be converted back into UST. Once the contract expires, the user can withdraw their deposit.
An interesting addition to note is:
Deposit Provider (DP) tokens are akin to LP tokens, allowing holders to redeem them upon withdrawal, but with far more use cases. For starters, DPs have the right to access products/content typically guarded by paywalls, participate in certain projects, & claim ICO/IDO tokens.
The vision for Pylon Protocol is quite expansive, with plans to move into many more areas as shown here:
b) Key Statistics
Pylon’s TVL sits around $315m.
As of November the number of wallets staking $MINE were ~32k
c) Importance to the ecosystem
Innovative solutions that could function for Web2 companies but in the background are Web3 will be huge as more traditional companies begin to realise the value that can be unlocked. Pylon is one of those solutions for me.
The idea that I can pay for Spotify, Netflix etc from DeFi yield, and get “all” my money back in the end is something that I believe will strike a cord. It’ll be interesting to see how this works as APY decreases but this will only know later on.
Additionally, new IDOs will continue to create hype in any ecosystem - Binance’s launchpad is testimony to this with huge sums of money flowing into new projects.
Combining these two factors is the reason why Pylon earnt a place on this list.
Nexus Protocol (@NexusProtocol)
a) What is it?
In crypto we are no strangers to massive gains and huge losses. Violent swings in the prices of assets catch even the best off guard and can cause liquidation cascades further sending the price downwards.
One problem that plagues borrowers from DeFi Protocols in these volatile crypto markets is; How do I manage my loan to value (LTV) ratio to make sure it doesn’t get into a zone risking liquidation?
Currently a manual and labour intensive process Nexus Protocol aims to automate this by managing the user’s collateral via smart contracts to maintain a high LTV ratio at all times.
Having launched with the safe and emergency modes (shown below with their LTV thresholds) the vision is an eventual suite of products that will enable users to optimise their yield whilst protecting their assets
b) Key Statistics
Nexus Protocol currently boasts 54.38M UST of value locked in vaults and 6.74M UST in staked Psi
c) Importance to the ecosystem
Anchor and Mirror protocols are both limited by the risks of liquidations, Nexus will provide a great solution to managed that risk and eventually optimise the return on capital.
You can follow the team’s progress and add feedback on their forum: https://forum.nexusprotocol.app/t/nexus-2022-plans/26
Loop Finance (@loop_finance)
a) What is it?
Another AMM / DEX but with a twist, it has a Web2 style wallet app used for payments!
If you can’t see an immediate connection, neither did I, until realising that it enables users to pay in whatever Terra tokens they have in their wallets.
Q4 2021 saw many steps forward for Loop Finance with the following milestones highlighted by CEO Tom Norwood aka @crypto_startups & summarised on this blog:
Raised over $6M for Loop Finance from both private and public investors
Launched our Loop Community platform
Launched V1 of our DEX, with swap, pool, farm, and staking options
Launched beta versions of our mobile apps
Launched Loop Ventures, a team focussed on helping incubate new projects on Terra who will then become our strategic partners
From the same article as above 2022 will see the following targets:
A DeFi NFT marketplace
Loop Learn – an incentivized and gamified crypto education platform in partnership with Terraform Labs
New bounty program – content bounties in partnership with Terraform Labs
An exciting partnership with a new cross-chain launchpad launching on Terra
Mobile apps coming out of beta and a Chrome extension wallet in the works
Impressive V2s of our Community platform and DEX launching in a few months
An impressive list of goals to hit and with the help and funding of Terraform Labs I think the team can execute on all of these without spreading itself too thin.
b) Key Statistics
The DEX continued to grow it’s TVL coming into 2022 with a rapid expansion up to ~$100m
c) Importance to the ecosystem
As above AMM’s are critical to the development of a robust and liquid DeFi ecosystem, although I am particularly interested in this case to see the growth of their payments offering and whether it can go a way to replicate CHAI’s success. That being said the goals for this year will see a broadening of the product’s feature set and this may offer new opportunities.
Honorable mentions
Prism Protocol (@prism_protocol) - creates a new asset class in DeFi by allowing users to sell their future yield by borrowing against it.
Mars Protocol (@mars_protocol) - A neobank that hooks into Astroport, to allow lending and borrowing against LP tokens, and savings via Anchor
Levana (@Levana_protocol) - Leverage up with a 2X Luna token, incubated by Delphi Labs.
LoTerra (@LoTerra_LOTA) - Decentralised lottery application run by a DAO
Orion Money (@orion_money) - Similar to Anchor but allows other stablecoins to be deposited. Earn ~15% APY on USDT / USDC / DAI / BUSD / FRAX.
Star Terra (@StarTerra_io) - Gamified IDO launchpad where users choose if they want to be put in a lottery or be guaranteed the right to participate in a given IDO.
Summary
This has been a look at Top Terra ($LUNA) Projects with traction to watch for 2022, as I hope you can see the ecosystem is fast growing with huge potential
I will be talking about it a lot more on Twitter. So if you follow me there @0xGregH that will give you the latest.
This forms part 1 of my Terra deep dive; subscribe/follow/watch this space for part 2 coming next week! If you liked this content, please give us a share and tag me! Subscribe below for more content: