TERRA (LUNA) — Whale Army AMA session
Terra is an algorithmic stablecoin platform, operating on a Proof of Stake (PoS) blockchain infrastructure built with Tendermint.
LUNA is the token of the Terra platform and is used in the issuance of stablecoins (TerraSDRs), as a price stability mechanism, as well as for staking and network governance.
The Terra protocol tries to achieve predictable rewards for network participants in all economic conditions — using transaction fees and the rate of LUNA burn (with an equilibrium supply of 1 billion LUNA) as levers to oppose changes in unit mining rewards.
Guests of the AMA session:
Aayush Gupta — the Community Lead and Manager at Terraform Labs
Jeff Kuan — leading business development at Terra
Most of the group members here are familiar with Terra Luna, and the story. But for those who are not, could you please introduce yourselves?
Sure- I am the Community Lead and Manager at Terraform Labs. I am a 2013 graduate from Indian Institute of Technology, Delhi (IIT Delhi) and a CFA & FRM holder. I come with >7 years of experience in Finance and Research, and am also an active investor in stock markets and new age technology startups.
Prior to joining Terraform Labs, I was working as an Equity Research Analyst at JP Morgan covering stocks in India Tech & Telecom, and US automotive sectors. As an angel investor in various budding blockchain startups, I remain closely associated with active investments, marketing and community building for early stage blockchain startups.
Btw, you should also check profile of our CEO Do Kwon: he is a Forbes 30 under 30:
I’m Jeff — I lead business development at Terra. In a previous life, I was a consultant, product manager at various startups, and most recently graduated from Wharton with my MBA. Have been in the crypto space since ~2014
Wow, an impressive and extensive background there Aayush Gupta — and when did you discover cryptocurrency?
I was late into the game. I started in 2018 right after the bull market but having known finance, I was disciplined with my investments and was able to come out clean despite the bear market :)
Could you please describe briefly what is Terra Luna, and how does it fit into the ecosystem ?
Terra is a blockchain protocol that supports stable, programmable payments and open financial infrastructure development. We are the most adopted and the highest fee-generating blockchain after Bitcoin and Ethereum. We process over $4 billion in transaction volume and more than $16 million in annual transaction fees on an annual basis!
In November, our monthly transaction volume grew 400%+ and our transaction fees grew 1400%+ YoY.
In fact we have a detailed sheet for your viewers showing growth in transaction volume and fees for every month. Will be happy to share it with sophisticated viewers later
LUNA requires a discussion in its own right. But let me say this in brief: Luna, as the native staking asset from which the family of Terra stablecoins derive their stability, utility, and value, acts both as collateral for the entire Terra economy and as a staking token that secures the PoS network.
Luna can be held and traded as a normal cryptoasset, but can also be staked to accrue rewards in the network generated from transaction fees. Luna can also be used to make and vote on governance proposals.
Yep so in other words — all the fees from our network accrue to LUNA stakers
Incredible, now, income is an often overlooked factor into valuing a project in my opinion, as more sophisticated investors enter the marketplace, I believe income generating protocols will be critical.
Absolutely! Thanks for highlighting this!
In respect to competition, who are they?
In respect to the landscape, who do you view as your competition. Utilities and their prospective protocols are currently fragmented, 2021, I forecast we will see a consolidation… call it vertically integrated
There are many components of our business — stablecoins, payments, synthetics, savings. I think Aayush Gupta can cover stablecoins
Sure! Here I go:
So if you look at stablecoins today, you can probably divide them into different classes.
Stablecoins like USDT and USDC which are backed by real physical assets: The issue with these stablecoins is transparency around presence of real physical assets (for instance, in the case of USDT) as well as near-zero interest rate yield on US dollar based assets in the world of quantitative easing and money printing. This makes custody of real assets expensive.
Rebase tokens like AMPL and ESD: These tokens increase the supply when the token price is above 1 USD to bring the theoretical peg to 1 USD and decreases the supply when the price is below 1 USD to bring the theoretical peg back to 1 USD. Issue with these stablecoins is their price volatility which has restricted their use in the markets until now.
Algorithmic stablecoins like DAI: DAI which is apparently the most used stablecoin token in the crypto ecosystem suffers from scalability issues where demand for stability far outstrips supply of DAI (generated from demand for asset leverage)
Terra stablecoins improves on the design: Terra stablecoin is an algorithmic stablecoin where the cost of minting is equal to the face value of the stablecoins minted — in order to mint 1 TerraUSD, only $1 worth of the reserve asset ($LUNA) must be burned.
TerraUSD monetary policy is infinitely scalable — helping DeFi apps and protocols achieve their full potential without restrictions. Further, all Terra stablecoins share liquidity — TerraUSD can be swapped to TerraKRW (and vice versa) on-chain with negligible fx fees, which will build on KRT’s proven track record and liquidity to bring DeFi to millions of users.
On the payments front, we’re #3 in Korea right now by transaction volume after KakaoPay and AliPay, but we’re growing the most rapidly. We also have aspirations to expand outside of Korea. MemePay in Mongolia is a good example of this, where ~2% of the total population uses our product.
Right and our payments model is quite unique. We believe that our model based on seigniorage has the potential to disrupt Ant Financial and Paypal. There is a great article written by Terra’s CEO Do Kwon on this: https://medium.com/terra-money/scaling-seigniorage-a72356a118ae
Your TPS must be very scalable!
Yes indeed it is. We are a DPoS network based on Tendermint- so scalability is not too much a concern. 6s block times
Our transaction activity is in Top-15: check here; https://blocktivity.info/
Now in respect to the growth of Terra ( btw — is this the parent company?, and how we address the overall platform?) Can we talk about income and revenues, where does it go? Shareholders into private company, tokenholders/POS, re-investment into the platform?
yes the parent company is Terraform Labs, but we go by Terra
As mentioned, all the fees from transactions on the network accrue to LUNA stakers
Sure, so holding LUNA is similar to owning a piece of network transaction fees for a network like Visa. If you stake LUNA, you are entitled to a share of transaction fees
We have a large base of solid investors. You can see them on Investor tab here: https://messari.io/asset/terra/profile
Btw, Pantera and Digital galaxy recently added positions in Terra with LUNA getting a notable mention in Pantera’s October newsletter
Yep. and just to be clear — VCs investing in Terra means they’re buying LUNA, whichs is the “equity” in our co
Interesting, considering their mandates are more geared to seed/new projects — this shows you guys really stand out, and have much more room to grow based on your current Mkt Cap of … as of now….
To control the supply and demand of Luna, will there be any token burn or buybacks?
As relates to supply and demand, LUNA has been deflating in supply due to token burns from seigniorage. Our total supply current stands at ~995 mn compared to 1bn at genesis.
Can you tell us more about Chai Payments in Terra, and how it contributes to the overall ecosystem and Luna itself?
If you go to Dapp.com today, you will see Terra’s Dapp “Chai”, the mobile payments app, featuring as the most widely used Dapp in terms of active users and number of transactions, ahead of DeFi Dapps like Uniswap and MakerDao. Chai has a user base of ~2.4 million users in Korea and is the fastest growing mobile payment app in Korea today (Chai recently attained a new milestone of reaching ~$90 million USD in transaction volume in the month of November 2020). Chai accounts for the majority of transactions on the Terra Network today.
I hope this infographic will be useful for users to evaluate CHAI
Chai is number 1 Dapp ahead of Uniswap or any other Defi app in terms of active users and volumes
We have a few more Dapps on Terra climbing their way up.
Do you believe you’re getting enough coverage in traditional outlets, bloomberg, wallstreet Journal, as well as twitter, coindesk, cointelegraph for instance.
And on that note, how does Binance view you guys, are they using any of your functions/services?
It’s something we’re definitely working on. I think in our early years, we were very Korea and Asia-focused. With the launch of Mirror and Anchor, we’re hoping to broaden our reach to include other geographies
Binance was a seed investor in Terra. We’re in talks re: collaborating on a handful of initiatives at the moment
I think of Terra as a product first company. Our pace of development and quality of products is unparalleled (my personal view). Having said that, I personally believe that although we had presence in some traditional outlets, we probably didn’t invest a lot of active time in cryptosphere. So we are making up for it now. We have become very serious about our community building and taken initiatives to improve our marketing through active community engagements. :)
Mirror protocol seems like a gamechanger, can you walk us through that with a brief summary… and enlighten us on the synthetic stock aspect to it?
and whilst you address this, news announced today on INJECTIVE protocol enabling users on their platform to buy synthetics in traditional equities, how does Mirror differ?
Mirror Protocol is third Dapp on Terra after Chai and Memepay. It is the first Dapp employing the use of Terra USD which was launched about 2 weeks ago.
Mirror makes trading and investing in stocks like Apple, Tesla, Google and Amazon possible with a click of a button in a totally secure and non-custodial manner on Ethereum and Terra blockchains. Mirror markets are live 24/7, globally accessible and allow for instant transactions, enabling participants to invest in popular technology US stocks and select ETFs possible with a fraction of trading fees. Response on Mirror from our community and blockchain experts has been beyond amazing. We have reached a TVL of ~$97 million in about 2 weeks.
So essentially Injective Protocol is using all the mAssets on Mirror Protocol. You can think of Mirror Protocol as a Layer 1 protocol with its vast diaspora of stocks like Apple, Tesla etc. Other protocols like Injective build on top of Mirror as Layer 2.
An increase in trading activity on injective increases the fees accrual for MIR tokens since CDP redemption fees for every mAsset irrespective of where it trades goes to MIR stakers
Injective, Terra and Band are in a 3 way partnership on this. :)
With respect to your services, would you say you’re more positioned as consumer-facing, or enterprise, or a blend of both?
It’s definitely both. For CHAI for example — we’re consumer facing in the sense that end users are using CHAI for contactless payments in 40 of the largest merchants in Korea. But in order to do that, merchants need to adopt CHAI as an accepted form of payments.
Same with Anchor. We’re launching a web app for it — so consumers can come to the site and interact with Anchor directly (like Compound). But we’re also in conversations with other businessnes / fintechs about integrating Anchor as a savings product, that they will offer to their users /clients. We’re building it as a turnkey API that any business can plug in, like Stripe for savings.
Can you guys give us a quick overview of Buzlink?
Buzlink is an innovative blockchain viral marketing tool that distributes stablecoin rewards to product referrers over the Terra blockchain.
The limitations with current product referrals are that while they can be highly effective marketing tools, they typically only benefit the direct referrer and do not provide visibility into the referral scheme. BuzLink creates explicit financial incentives for users to share products to their networks effectively to maximize the probability of a sale. It enables new business models for influencers and marketing freelancers to generate revenue from permissionless product referrals
For merchants, BuzLink uses smart contract functionality to enable viral marketing for every product line with little engineering work. BuzLink also guarantees that merchants see targeted returns on every marketing dollar since rewards are paid on a successful purchase basis.
The usage of Terra’s open blockchain ledger allows transparent sharing of information between users and merchants, removing dispute and arbitration costs, as rewards are algorithmically defined within BuzLink smart contracts.
Buzlink goes live in Feb 2021. We are running a referral campaign on Buzlink till Dec 31.
Are there any gaps in respect to services or functions that Terra is not servicing or addressing in the eco-system? Any major roll-outs for 2021 and beyond?
Terra has come a long way in the last 16 months but we are still in the early very rapidly growing phase of startup growth trajectory. Chai is the fastest growing payment network in Korea and our recent partnership with Chai BC card is enabling larger merchant integrations and adding even more momentum to our rapidly growing payment transaction volume.
Absent COVID, we would have been present in ~4 markets today instead of 2 currently. But that has enabled us to build some great applications — Mirror was the first one and then we launched Buzzlink and Mirror mobile app competing with Robinhood.
We have a lot of updates for 2021. But guess I will try to address community questions first
We’re laser-focused on real world adoption, and bridging the gap between crypto <> traditional fintech with regards to investing, saving, etc. I’d expect our products to continue addressing needs in these areas
What are TERRA hottest features that are currently pushing the development of the project?
CHAI, Mirror, Anchor, Buzlink!
What are the use cases of $LUNA?
Do you have any mechanism or method to help make $LUNA scarce to maintain its value constantly?
1) Luna is the native staking asset from which the family of Terra stablecoins derive their stability, utility, and value, acts both as collateral for the entire Terra economy and as a staking token that secures the PoS network.
2) Luna can be staked to accrue rewards in the network generated from transaction fees.
3) Luna can also be used to make and vote on governance proposals.
Luna has a deflationary supply in its current growth phase due to burns from seigniorage. Plus you are also entitled to MIR weekly airdrops. The current APY from staking LUNA is >20% from MIR and transaction fees
Will Chai expand outside of South Korea or is the expectation that other Fintech companies will adopt UST?
the CHAI team is working on expanding to other countries. See MemePay in Mongolia as an example. I expect that we’ll be a handful of other markets in 2021
What Terra’s long-term vision for the future?
Our vision for Chai wallet is a savings account that supports payments that provides a fixed income yield (a stable interest rate from Anchor).
Further, by tapping into investments via Mirror and bridging to Defi ecosystems in different chains like Cosmos, Solana, BSC and Polkadot, we want to increase the usage of Terra stablecoins in Defi ecossystem.
As relates to payments alone, we believe that Chai’s business model would be a step change in the payments industry and would position us well to disrupt business models of new age payment companies like Ant Financial and Paypal!
Why exactly did TERRA build MIRROR PROTOCOL other than focusing on TERRAUSD development?
Mirror protocol employs an excellent way for use of Terra USD. Terra USD minting has increased manifolds since the launch of Mirror. We expect it to increase even further after the Anchor launch and via integrations to other blockchains like BSC, Solana, Polkadot etc. in future
At the end of the day, all products that we build on Terra come back to making our stablecoins more useful to spend, or more attractive to hold. We want our stablecoins to be interchain, and useful. And Mirror was a great way for us to do that
Will there be more stablecoins minted?
Yes, Terra USD is infinitely scalable unlike DAI. So as demand picks up due to addition of more mAssets in Mirror, due to Anchor and as to when we do more chain integrations, terra USD minting will increase.
TerraKRT mint will increase as usage in Chai grows in Korea
What has been TERRA’s biggest challenges and also your greatest achievements?
Challenge or you may call it vision: To beat Ant Financial and Paypal and validate a seigniorage based business model not seen before.
Accomplishments: We have said so much already. Do we need to say more? But yes, we have just started. We are still in rapidly growing phase- so a lot more is yet to come.
Awesome job team Terra, we are all about helping projects we believe in, if you ever want to share ideas and tap into our network, please let us know. Thank you for putting the time in, introducing your project and answering our questions… all my questions are done for now, feel free to answer the above at your own pace. Have a great Christmas and really look forward to seeing TERRA and LUNA explode in 2021.
Remember everyone to market buy haha :)
This is an edited version of the AMA session — the full version you can find by this link:
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