Overview

The events that happened in May 2022 in the world of cryptocurrencies were unprecedented in the history of this asset class; More than 40 billion dollars of capital was lost and many small investors from billion dollar funds suffered losses.

LUNA's market value was about 30 billion dollars shortly before the collapse. The consequences of what happened to the Terra network and the LUNA currency were so severe that there have been at least 8 confirmed cases of suicide due to capital loss in the Terra ecosystem.

Creating a stablecoin from almost nothing greatly increases capital efficiency and can bring rapid growth to any ecosystem. Terra's strategy for creating a decentralized stablecoin seemed to be to use the “Growth Hack” to get as big as possible. The main idea of ​​Do Kwon was Anchor, the main protocol of this network and its attractive profit. With the help of attracting stray capital, the rapid growth of the number of Terra network users became possible.

In the first quarter of 2022, with the collapse of the crypto market, Anchor had become a serious problem for Terra. Billions of dollars that could have been put to other uses and used in other platforms and even in the real world were wasted only to make profit in Anchor smart contracts. Such an attractive profit was even a hindrance to other beneficial projects of the Terra ecosystem. The bear market had reduced demand for loans, and Anchor's reserves were dwindling daily at an alarming rate.

In March, proposals to cut profits emerged at Anchor's governance forum. It has been revealed that the proposal approved by the Anchor team was a much steeper cut than what was approved, but that Do Kwon personally vetoed it. This brings us to another major problem with Terra's ecosystem; This network was decentralized in name only. The development teams of many of the "independent" projects in the Terra ecosystem were either directly employed by Terraform Labs or in critical need of its support. To support the Anchor protocol benefit, Terra had to dump LUNA. On the other hand, the issue of buying Bitcoin with the help of selling LUNA was also raised and carried out. To make up for this by "burning Luna", Do Kwon made perhaps his most fatal mistake; Listing UST on centralized exchanges like Binance and FTX created new demand for UST and burning LUNA. By taking the pricing process further and further out of Terra's control, the situation worsened. Another destructive factor was personality cult, halo effect and maximalism of Do Kwon fans and Terra ecosystem. When bigotry takes the place of logic, critics are marginalized and the power of reason is lost. Evidence of criticism of the Terra ecosystem has been available since 2018. Criticisms that Do Kwon has faced harsh criticism many times [1].

All of the events discussed eventually led to the creation of a new network called Terra 2 and its native cryptocurrency called LUNA 2. This network and its cryptocurrency was an attempt to revive the Terra ecosystem and compensate the users who faced irreparable losses [2].

Basically, following the demise of the stablecoin, the Terra Luna ecosystem required a fresh new token to be implemented on the new Terra blockchain. This token, known as Luna 2.0, serves that purpose.

Do Kwon, the founder of TerraForm Labs, proposed an idea that would see a new chain replace the old Terra network. This idea was given the name "the Luna rebirth." In conjunction with this, the previous version of Luna was succeeded by Luna 2.0. It has broken ties to the UST stablecoin, which was one of the factors that contributed to the crash in the first place.

On May 28th, during the genesis block for the new Terra chain, Luna 2.0 was made available to the public. The first block on the new mainnet, which was referred to as Phoenix-1, was produced at the time that was designated as the launch time, which was 6 AM UTC (2 AM ET, 11 PM PT). Terra, who originally planned for this to launch on May 27, has moved this date back one day. On May 27, snapshots for the coin airdropping occurred at Terra Classic block 7790000 [3].

Methodology

The intention of this dashboard is to continue developing a step-by-step dive deep Terra analysis considering current data.

To do so, I have created another preliminary report that displays the following metrics:

• Weekly and cumulative new contracts deployed
• Stablecoins transfers in and out on the ecosystem
• Users transferring stablecoins in and out on the ecosystem
• Netflow volume of stablecoins
• Average volume deposited and withdrawn

Contracts deployed on Terra

Stablecoin flows on Terra

Looking at the weekly new contracts deployed on Terra, we can see that the trajectory has been in small waves starting with a peak of 87 new contracts in the week of 20 June, i.e. one of the first weeks.

Since then, few contracts have been created on a weekly basis except in mid-August and November where values of 50 new contracts were reached again.

If we look at the accumulated new contracts, we can see that it has a rather fine trend.

Going into detail with the stablecoins within the new Terra ecosystem, we can see that there are more inflows than outflows, which is good for ensuring the continuity of the platform.

As we can see, axlUSDC is being the most used stablecoin by far with respect to its competitor axlUSDT.

In fact, axlUSDC has not had a single week in which there have been more transactions out of Terra than in. However, alUSDT has had a bit more variety.

If we look at the evolution and usage of users towards stablecoins in Terra, we can observe something similar to the previous metric. In this case we can again see that there are more users depositing stablecoins in the ecosystem than withdrawing them.

Again, the most used stablecoin is axlUSDC with a difference towards axlUSDT. In this case, we can see again how during all the weeks, axlUSDC has positive netflow values while axlUSDT has some negative ones.

As far as volume is concerned, we can see that in this case we also see more volume entering than leaving the ecosystem.

axlUSDC is again at an advantage with respect to axlUSDT. However, in this case the difference is not that big.

If we take into account the netflow, we can see that in this case, both stablecoins are positive every week, so more capital is entering than leaving on a weekly basis.

Finally, these last graphs show the differences between the average volume transferred to and from Terra.

We can see that the average is higher for inflows than outflows, especially for the axlUSDT stablecoin, which has much higher averages than axlUSDC.

In fact, axlUSDC has some weeks in which the average is higher for outflows than inflows, although these are very occasional events.

If we go into more detail, in the first 3 graphs above we can see which are the projects behind the new contracts. These include Terra Poker, which has received the most transactions, and Valkyrie, which has been the most used by Terra users.

In the graphs on the right, we can see the contracts divided by sector. If you look at them, most of them belong to tokens, which are being the most used, followed by DeFi and DEX contracts.

Key insights

• Few contracts have been created on a weekly basis except in mid-August and November where values of 50 new contracts were reached again. If we look at the accumulated new contracts, we can see that it has a rather fine trend.

• Regarding the contract names, Terra Poker has received the most transactions, and Valkyrie has been the most used by Terra users.

• Most of the contracts belong to tokens, which are being the most used, followed by DeFi and DEX contracts.

• There are more stablecoins inflows than outflows.

• axlUSDC is being the most used stablecoin by far with respect to its competitor axlUSDT.

• There are more users depositing stablecoins in the ecosystem than withdrawing them. The most used stablecoin is axlUSDC with a difference towards axlUSDT.

• axlUSDC is again at an advantage with respect to axlUSDT regarding the volume.

• The average is higher for inflows than outflows, especially for the axlUSDT stablecoin, which has much higher averages than axlUSDC.

  
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