Terra: Why LUNA Could Moon on UST Demand!!

Sep 14, 2021

👨‍🏫Terra Recap👨‍🏫

Terra was built by Terraform Labs, a software development company based in South Korea which was incubated by a conglomerate of South Korean eCommerce companies known as the Terra Alliance. Terraform Labs raised around 33 million dollars across various funding rounds in 2018, and the Terra main net went live in April 2019. In a sentence, Terra is an ecosystem of decentralized stablecoin tokens which are collateralized by the LUNA coin, and the first Terra stablecoin was the KRW token for the Korean Won.

📰Terra Project Updates📰

The Terra dApp that people are really itching for however is Ozone, a decentralized DeFi insurance protocol which was first detailed by Terra co-founder Do Kwon in May on Terra’s governance. Without getting too technical, Ozone will use a portion of community treasury funds to insure the UST earning interest on the Anchor protocol. Over a dozen of them banded together in June to create a 150-million-dollar ecosystem fund to kickstart even more Terra projects. The list included some of the biggest names in crypto including Pantera Capital, Arrington XRP Capital, BlockTower Capital, and even Galaxy Digital.

📊LUNA Price Analysis📊

All these announcements and developments have had a predictable effect on LUNA, which recently rallied way past its previous all time high. This effect fundamentally boils down to the increased demand for LUNA to mint UST, whose market cap has also grown exponentially over the last few months. Most of this demand for UST has come from Terra’s DeFi protocols, and these have about 7 billion dollars in total value locked between them at the time of shooting.

🚀Terra Columbus 5 Upgrade🚀

Columbus 5 is slated to be the most significant upgrade Terra has seen since its main net launched, and it will introduce 3 new features to the Terra blockchain. The first is the burning of all seigniorage fees. Seigniorage is just the fancy term used to describe the small fee for burning LUNA to mint UST. The second feature Columbus 5 will bring to Terra is interoperability with Cosmos’ Inter Blockchain Communication Protocol or IBC. The third feature Columbus 5 will bring to Terra is Ozone, the decentralized insurance protocol I explained earlier.

⚖Terraform Labs vs. Regulators⚖

As you might have guessed, Terra’s status as a stablecoin issuing protocol has put it on the hit list of regulators around the world. Interestingly, Do isn’t all that worried about US regulators because Terraform Labs is based in South Korea. If the US SEC does come knocking though, Do plans on dissolving the company and going completely decentralized.

🤔Could UST Become Crypto’s Stablecoin?🤔

As far as I can see, the biggest barrier to Terra’s UST becoming crypto’s decentralized stablecoin is liquidity - AKA exchange support. Even if Terra becomes fully decentralized, centralized exchanges will not hesitate to delist LUNA or UST if they’re pressured to do so, and that would cause all sorts of issues for UST and Terra’s ecosystem.


📜 Disclaimer 📜

The information contained herein is for informational purposes only. Nothing herein shall be construed to be financial legal or tax advice. The content of this video is solely the opinions of the speaker who is not a licensed financial advisor or registered investment advisor. Trading cryptocurrencies poses considerable risk of loss. The speaker does not guarantee any particular outcome.