Terra Ecosystem’s Potential Reinvention


Terra Ecosystem’s Potential Reinvention

Do Kwon has now spoken out about his Terra Ecosystem Revival proposal. Despite the significant challenges, could Terra reconstitute itself as a true L1 network?

Here are my ideas and reservations about “LUNA 2.0.”

Do Kwon unveiled an “ecosystem recovery strategy” to pave the path for a healthy L1 environment. It’s based on the idea that Terra has a “vibrant development environment” and “high brand awareness.”


This admits that $UST and $LUNA (in their current forms) are no longer in existence. Do Kwon proposes “reconstructing the chain” in order to protect developers and the ecosystem. This indicates Terra’s transition to a full-fledged L1.

Here are my main concerns with this redemption arc: How will venture capitalists and funds react to this proposal? Is it possible for them to reinvest in a project that failed? The following is a list of known $LUNA supporters. There are some huge names in here.

These funds may struggle to persuade their investors to back the most well-known crypto disaster in the history of both the crypto sector and Tradfi. This occurrence received international attention and became the talk of the town in financial circles.

Then there’s the subject of community. Yes, Terra has one of the largest crypto communities. However, the relationship is toxic. The quality of the project is dependent mostly on the community at large, confidence as well as devotion (think similar other projects…)

The following question revolves around Do Kwon. According to reports, Do Kwon was intimately involved in the failed stable coin “Basis Cash.” Will the community/investors truly want Kwon at the helm after two significant failures?


Is it, however, theoretically feasible? If a $8.25b blockspace and current $BTC holdings are assumed, $UST holders will regain $0.33.

Although these estimates appear to be promising, I believe the issue is the assumption of a $8.25 billion blockspace. Given the previously mentioned problems, the valuation will certainly be much lower.

Keep in mind that cryptocurrency pricing is predicated on future growth. As a result, we’ve seen values in the tens of billions of dollars for L1s with little transaction volume. However, with Terra’s reputation so tarnished, acquiring new users/investors becomes difficult.

$ADA, for example, has barely 100k daily transactions yet is valued at $18.7 billion. In comparison, Visa processes 597 million transactions every day and has a $413 billion market valuation. Based on market cap transactions, $ADA is valued 270 times higher. Why? Because investors are placing bets on future development.

Similarly, Terra would require significant expansion to justify a comparable price. Where is this expansion coming from? Recruiting new investors and users. When you’ve lost the industry’s trust, this acquisition becomes significantly more difficult.

Terra’s technology (in the absence of the $UST mechanism) is no more amazing than that of other comparable L1s. As a result, the most difficult component of $LUNA 2.0 will be convincing the smart money that THIS is the place to invest rather than the alternatives (given recent events).

So, throughout this thread, I’ve been playing devil’s advocate. Is there, however, genuine hope for a comeback? I believe it has promise. However, it must be pushed by the community (similar to how $FTM evolved in its early days). At the same time, it’s difficult to ignore the headwinds.

The success of an L1 is ultimately determined by its dAPPs. Ethereum’s success can be attributed to its thriving ecosystem of dAPPs and developers. Many of them are modest ventures that have constructed their communities from the ground up.

Even if Kwon finds investors to jumpstart the new L1, smaller enterprises would struggle to attract funding to establish, develop, and maintain dAPPS. To thrive, new enterprises require enormous runway and funding. Can they pull it off? Yes. Will it be difficult? Absolutely.

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