Terra is a blockchain which focuses on Decentralized Finance and which originally featured a number of algorithmic stablecoins, each pegged to a national / international currency; these stablecoins facilitated transactions on the network and, along with Terra's native token LUNA, maintained the stablecoin peg by allowing users to arbitrage across currencies.

Terra was built on the Cosmos SDK & the Tendermint Consensus algorithm; its smart contracts are typically written in Rust which are then compiled down to CosmWasm / Web Assembly. In October 2021 Terra enabled Inter-Blockchain Communication to allow communication with other IBC-enabled projects like Cosmos Hub and Osmosis.

In May 2022 Terra, then the third largest DeFi ecosystem by TVL, collapsed spectacularly wiping out over 30 billion dollars of capital invested in the ecosystem overnight. Vitalik recently wrote some about UST's collapse.

The Terra chain was developed and deployed by Terraform Labs and many projects on Terra's blockchain were incubated by capital from TFL. Some of the most notable DeFi projects on Terra were:

  • Anchor, a decentralized money-market offering 20% APY on stablecoin deposits
  • Mirror, which mirrors real-world stocks
  • Pylon, enabling project launches through crowd-funding
  • Orion, which exports Anchor's 20% yield to other chains
  • Astroport, Terra's next-gen AMM
  • Mars protocol, trustless lending protocol

... I worked with Levana to create the first perpetual swap protocol on Terra |・ω・`) we were nearly ready to launch our swap product (we deployed our public beta and had plans to launch in June) when the ecosystem imploded.

It was sad to watch one of the most promising DeFi ecosystems crumble in real-time as UST lost its peg and its collateralizing asset, LUNA, rapidly devaulued and lost its ability to back the circulating UST. I'm thankful Levana and some other protocols came out the other side alive but many protocols that built on Terra were burned so bad they simply abandoned their projects. Some had their entire treasuries locked in Anchor, the magical 20% yield machine, and they could only watch as their UST "stablecoin" devauled 95% over only a few days.

I was rekt personally but I came out alive somehow, and am lucky to have invested myself in a company that didn't keep its entire treasury in UST. Still, I believe in the things I am doing through my work at Levana and look forward to deploying our derivatives on a new chain.