A look at Terra’s ecosystem

Terra’s native staking token, LUNA, was one of the best-performing cryptocurrencies of 2021, with gains north of 13,000%. Terra also surpassed Binance Smart Chain (BSC) in total locked value by $ 17.62 billion, making it the second largest DeFi chain immediately after Ethereum.

Much of this growth is due to Terra’s ecosystem, with a community of developers continually building decentralized applications on top of Terra. But it may come as a surprise to know that before there were hundreds of monkeys built on Earth, there were only two that existed in early 2021 in the Mirror Protocol and Chai.

Mirror allows users to create synthetic assets, mimicking the pricing behavior of traditional and digital financial assets. Traders use Mirror to gain exposure to these markets without holding or owning the underlying asset. Chai, on the other hand, is a payment program operating in South Korea with more than 2.5 million users. These programs were created on the basis of real benefit, providing practical use for users and promoting cryptocurrency.

Anchor Protocol

Its third core program, the Anchor Protocol, was launched only on the main network in March 2021, but it quickly became a popular protocol for yield farming in the space of decentralized finance (DeFi). Anchor is designed to generate returns in Terra’s stable, TerraUSD (UST), by locking the equivalent LUNA or Ether (ETH). So far, the total side value locked in Anchor has grown to $ 5.2 billion, according to the official website, which is already a 4.375% change from the first day of its launch.

Side-by-side growth coincides with the expansion of its user base, increasing daily by about 440 users, which, compared to Mirror, is growing at almost three times the rate. The increase in the user base can also be seen to grow along with the gradual increase in Terra’s transactions.

Increase in the number of applications

Following the core programs, many new projects have sprung up in the Terra ecosystem in the categories of gaming, metaverse, DeFi, unbreakable tokens and many more. There are also multiple cross-chain communication protocols that enable Terra assets to migrate freely to other chains. For example, Solana bridge protocol Wormhole v2 facilitates transfers of assets across Terra, Solana, Ethereum, BSC, Polygon, Avalanche and Oasis. This was made possible by the upgrade of Terra’s Columbus-5 flagship.

Developers have also built projects with the core Terra apps as a base. One example is Orion Money, which uses the Anchor Protocol to generate higher yields for other stable currencies such as Tether (USDT), Binance USD (BUSD), USD Coin (USDC) and Dai. It does this using EthAnchor, converting stable coins into Wrapped TerraUSD (wUST) and then depositing it to Anchor where the APY is up to 20%.

Why did Terra grow up?

Back in July 2021, Terraform Labs, the company behind the Terra blockchain, acquired $ 150 million from several investors, including Arrington Capital, Lightspeed Venture Partners and Pantera Capital. The funding was for incubating projects on Terra that were likely to spur further development.

However, Do Kwon, founder and CEO of Terraform Labs, thinks it’s something more fundamental. In an interview, Kwon said that what has grown Terra’s strong community is rooted in the concept of decentralized money that Terra is able to achieve with its algorithmically stable currencies.