Pipo | Flipside Analyst

    Pipo

    Joined Jun 16, 2021
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    1Upvotes
    Measuring Risk

    Measuring Risk

    Aug 3, 2021 - New users coming to Terra network is the basis to grow the ecosystem long term. As the network continues growing the risk of having less users constitute a huge challenge for both sustainable price, build of trust and keeping the community involved. Hence, new users are a good way of measuring risk for each of Terra’s protocols. To understand the dynamics of the different protocols within Terra ecosystem we could see what is the relationship between new users and new protocol launches (in this case Terraswap, Anchor and Mirror). On the other hand, delegators play an essential role in the Terra ecosystem. For those Luna holders that decide not to run validations themselves, they can actually delegate their tokens to validators who run the nodes. In return they will get rewarded. Delegators also play an active role in keeping validators accountable. Once they stake their tokens delegators have to keep an eye so that validators behave properly (maintaining Uptime of 100%, reasonable commissions, self-delegate as much as possible and not having a very high voting power). Ideally the delegator should aim to keep this as top priority, thus the ecosystem will be more decentralized and validations will run smoothly and everyone in the community will get rewarded their fair share. That said, it would be interesting to see what are the total volumes transacted in each protocol broken down by delegators and non-delegators. As we get to understand the dynamics of volumes transacted between them, we can also establish this as a metric to measure risk in each protocol. Low delegator volumes against non-delegators could eventually be a problem for the sustainability of the Terra ecosystem medium and long term.

    Pipo