4 min read

Can Terra 2.0 Make a Comeback?

Can Terra 2.0 Make a Comeback?
Photo by Benjamin Voros / Unsplash

Whew what a week! We're still dealing with the consequences of Terra Luna's collapse. Do Kwon wants to create Terra 2.0, and the majority of Terra builders are supporting him.

Is this a good play for you as an investor? I share my thoughts.

Today We'll be Covering:

The State of Terra: They want to resurrect Terra.
Stablecoins 101: $UST is dead. Where should you invest your stablecoins?

Let's dive in!


The Resurrection of Terra Luna?

Terra's not dead yet.

Terra Form labs and The Terra Builder Alliance have agreed to a proposal.

Read the complete details​​​

A few highlights:

They will hard fork Terra into a new chain called Terra. The old one will be called Terra classic. (Just like what Ethereum did in 2016)
• This will be a new chain without $UST. No native stable coins!
• They're banking on the dapps, developers, and community support.
• New Luna will be airdropped. Here's the distribution.

"Ser, what is Cliff and Vesting"
​​

Let's look at the 1 year cliff, and 4 year vesting thereafter.

• 1 Year Cliff means you get nothing for the first year. 0 Luna.
• 4 year vesting means 25% vesting at the 12th month, and 1/48th (2.08%) more vesting each month until the 48th month.

It's their way of incentivizing people to stay with the Luna ecosystem and be invested.

Here's the latest on which builders are supporting Terra 2.0

Terra builders committing to 2.0. Delphi Projects don't seem to be committing.

My Opinion:

I'm not optimistic on the future of Terra 2.0. The centerpiece of Terra was centered around $UST. Without their stable coin, what is Terra's value proposition as a layer 1?

The Terra brand name is tarnished now. While they do have great developers, they're facing significant headwinds as a Layer 1.

Trust is lost. And they're facing stiff competition from Ethereum + Layer2s, Soluna, Avalanche, FTM, Near Protocol, and more.

The tokenomics distribution looks horrible.

I've seen many Crypto projects collapse and try to make a comeback. It rarely works out.

Do your own research and form your own opinion, but I'm staying away from Terra 2.0.


StableCoins 101

Stablecoins should be in every portfolio, especially now that we're in a bear market.

While most stablecoins are pegged to $1, they're not all created equal. They make trade offs among centralization, collateral type, liquidity, and more.

In this thread, I do a detailed breakdown where we go back to the basics of how Stablecoins work.

My rankings:

S: None
A: USDC, BUSD
B: USDT (Tether), Dai, Mim
C: Frax

Even though I give Frax a C, I view it positively. The algorithmic aspects presents a risk. $UST collapsed and DEI lost its peg. So I do favor coins that are fiat backed or are over collateralized.

Here's a sample portfolio I made that assumes a portfolio with 40% in stablecoins.

stablecoin portfolio for the bear market

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