The Course of (Terra's) Empire

This article will revolve around my experience and emotions felt during Luna's rise and demise and the thoughts of the people building apps/protocols on the network.

The Course of (Terra's) Empire
The Course of Empire

Before we start, this article will revolve around my experience and emotions felt during Luna's rise and demise and the thoughts of the people building apps/protocols on the network.

The Savage State

-Entering the Terra Ecosystem

Algorithmic coins have come and gone. LUNA/UST brought in an exciting mint/burn balancing mechanic that was aimed at stabilizing UST's price and growing Luna's price when the network was onboarding more capital.

The number of people entering the market far outweighed the number of people leaving the market during the bull market. This ensured the Terra ecosystem's early success. The line of thinking was that the more significant amount of value stored on the chain made the chain more robust and more liquid.

Hindsight would change that opinion, however.

With entering uncharted land (ecosystems based on algorithmic stablecoins), it came with a lot of unexpected setbacks and curious discoveries.

Regardless, questions were brimming within the community.

What can be done with a stable 20% APY interest? How long could this experiment last? Is this the rise of a new form of decentralized collateral? How could this change the economic landscape for stable coins?

Questions, questions, questions.

The Arcadian

-What was it like in the beginning?

My experience with the Terra ecosystem was my contributions to 2 different Terra DAOS.

One of them was a utility project aimed for project owners to verify NFT ownership for automatic discord roles.

The other was a community-led, sustainability-focused yield aggregator and accelerator.

Both aimed to improve the ecosystem by adding quality-of-life features or proposing to make something more radical - community-funded, developed, and managed protocols.

Weekly meetings would occur where developers/marketers/designers would chime in their ideas and philosophies to push the project forward.

It was a unique culture of interesting people from varied backgrounds coming together to build a DAO which would aim to become self-sufficient and human-first.

The Consummation of Empire

-What was it like before the crash?

Our organization successfully raised funding with venture capitalists and built relationships with other Terra protocols. The discussion of onboarding contributors to full-time had begun and excitement for the future was at its peak.

Together, we were creating a type of empire we'd never seen before, how would governance work? How much influence do we want to have on other protocol's governance? How would we motivate the community to work together to develop the future of DeFi? How could we take this to the next level?

During this time, organizations have experimented with different ways to reward contributors. The idea of having freelance work accepted and paid out through smart contracts rose above the rest. It was so exciting to receive my first paycheck through a smart contract. The pay was good, the project had heart, and a strong community supported it.

Times were good.


-How has the crash affected builders/community?

Unfortunately, the crash had severely affected many individuals' and organizations' finances. It was hard to watch the messages stream about the amount of money individuals lost from their LUNA/UST investment. Some people had invested everything they had. I've read some stories about people mortgaging their homes. It was/is a disaster.

Despite removing my capital before the crash, I can empathize and relate with those who had a significant amount of their value stored in the LUNA ecosystem. Not long ago, I was putting 90% of the money I was earning at my full-time position into buying ETH.

When you're constantly surrounded by talented developers, designers, and marketers, it's difficult to see the potential of everything crumbling apart. But, unfortunately, algorithmic stable coins are still an elusive concept for the crypto community, which has yet to be cracked.


-How are teams dealing with the crash?

This is still a WIP for a lot of teams.

There seems to be a divide in the community regarding the best course of action. One side has already fully exited the ecosystem with no plan to return. While the other side wants to work to revive the chain.

This is by far one of the more interesting situations in crypto-based on the amount of talent that has been displaced.

Some chains have decided to work towards providing incentives for ex-Terra builders to come and build on their chains instead. The Terra ecosystem (before the crash) was renowned for it's excellent UX and clean, easy-to-understand UI. From the wallets, to bridges, to applications, it is truly a shame that one of the better UX chains is the one to pass.

But this opens up the opportunity for the talented builders I've come to work with to find new positions at new organizations to keep pushing the space forward. As I had said in a post, sometimes it's best to invest in things that the market can't take away from you - your skillset, passion, and curiosity.

Market Conclusion

-What now?

Although there has been a few algorithmic stablecoins looking to replace UST's position, I do not forsee any of this generation's algorithmic stablecoins getting to even 20% of UST height (~$19 trillion market cap) unless significant changes are made to the structural balance between minting and burning.

Although there has been discussion if Anchor's APY was not artificially inflated to keep up with the promised 20% if the system would have lasted longer, hindsight has taught me, the larger the market cap an asset has without the necessary collateral the more likely it is to topple over.

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