Hello and welcome to The Ether. Today is Tuesday, February 15th 2022. This episode of The Ether is brought to you by Luart. Luart is the first gamified NFT platform built on the Terra network. Luart provides a seamless minting and trading experience all while earning you rewards just for being a user. Be sure to follow them on Twitter and join the community in the Discord server for the most up to date news and announcements regarding all the hot new NFT launches, platform upgrades, and new projects hitting the secondary marketplace. Are you ready to #PutYourHelmetOn and join the movement? Find out more luart.io. This episode of The Ether is also brought to you by WeFund. WeFund is a community crowdfunding cross-chain incubator on Terra and it’s the first launchpad that implements a milestone funding release system to protect investors. All money raised for projects is deposited in Anchor Protocol and it’s refundable, and all decisions are based on community voting power. WeFund is community focused and designed to be a user friendly experience for both project creators and investors. Be sure to follow them on Twitter and join the Telegram for more information. Links are in the show notes and check them out online at wefund.app. TerraSpaces appreciates the support from all our sponsors. Today on The Ether we have a Based Space hosted by TheCryptoMewtwo.eth, it’s the Terra AMA with SJ Park. Let’s take a listen.
What’s good everyone? I see we got some new folks, TerraSpaces, Chris… Nice to see you guys? How’s it going? I think we got probably a few minutes here before we get started. What up, Chase, are you here? Sean? Trying to Chase up here. Super. We got two other co-hosts guys tuning in from ETHDenver. So let’s see how this one goes. A little remote space. What up, Chase? Super.
If you hear cars honking sorry.
Where are you guys at?
We’re at the Art Hotel but we’re on top.
Oh shit. Yeah, it’d be mad funny if someone tries to raid and find you guys.
I just doxxed our location. [laughs]
Chase @ ethdenver 2:55
It’s your IQ play. How’s it going, guys?
That’d be hilarious, bro. I see. We got Parker.
What’s up, Darb?
I’m gonna put a quick promo tweet, guys. Let me just jump into it. We got a little bit of a limited time with Parker. So
Chase said he’s gonna reset, his interface is bugging.
Oh, okay. If Parker’s have a… Can you just keep inviting him?
Yeah, I can invite him when he gets in.
I saw him. I see Chase is back as well. What up, Darb? Let’s see you brother.
Chase @ ethdenver 3:30
All right. Can you guys hear me?
Yeah, I hear you. Do you hear us?
Chase @ ethdenver 3:33
Yeah, yeah. Twitter Space is kinda buggy right now for me.
Then I want to see us when…
Might be that hotel’s internet, bro. I see Parker’s in here.
Yo, it’s a bottop up. [laughs]
Chase @ ethdenver 3:49
You two, when do you get in? You get in tomorrow?
Yeah. Oh wait, no, no, not tomorrow. Thursday, Thursday.
Chase @ ethdenver 3:56
Oh okay, nice. Curious if anyone else is tuning in from ETHDenver right now.
Parker I just sent you a few DMs trying to… There’s a… You should see like a pop up… Oh, did he drop?
Yeah, let’s see his profile.
Chase @ ethdenver 4:13
Also if you’re on desktop…
SJ Park 4:17
Yeah, sorry, guys. I think I’m on now.
Yeah. What’s up, Parker? How you doing?
SJ Park 4:21
Hey, man, how are you?
I’m doing great. You got myself, TheCryptoMewtwo, you got SuperHigh and Chase here from BacedSpace, man. We’re excited to have you on.
SJ Park 4:31
Awesome. Yeah. Thanks for having me. I know we have like 30-ish minutes, but I’m sure we can get through a lot of it. Happy to start wherever you think is fit.
Yeah, I think the listeners that are also tuning in maybe on YouTube or the podcast, a lot of them are much newer, and might not be as familiar with Terra. So maybe if you could just give us a brief overview of what Terra is and what it means for the crypto ecosystem, that’d be extremely helpful.
SJ Park 4:58
Yes, I would say Terra is a lot of things. But at its core, it’s a layer one blockchain. And Terra is a suite of decentralized algorithmic stablecoins. So, really, our mission is to create a new and better, improved form of money. And that drives everything that we do. So everything that you see built on Terra, or the crazy LUNAtic community, everybody has the singular goal of getting UST, which is our US dollar pegged algo stablecoin to essentially become the de facto currency for DeFi and for Web 3. And we’ve been off to a great start. I think we’re just at the beginning. So happy to talk to any of those points or anything specific that the listeners or you guys have in mind.
Yeah, I would love to touch on the UST and the stablecoin, and how that’s set up within within Terra, because it’s very different, right, from other stablecoins that users might be familiar with.
SJ Park 6:02
Sure. So by design, UST being an algorithmic stablecoin is a bit different than, let’s say, how Tether and Circle operate. So if you look at Tether and USDT or USDC, there is essentially a dollars worth of bank deposits or money market securities backing a dollars worth of those stablecoins, whereas for UST it’s really governed by a set of game theoretic incentives, and an on-chain swap mechanism whereby a dollars worth of UST is always able to be swapped into a dollars worth of LUNA and vice versa. So to the extent UST moves away from it’s pegged to the dollar and trades at $1.10, or vice versa, trades at a discount, at $0.90, users are able to either capture that market arbitrage by performing the market swap mechanism. And that’s helpful in the sense that it sets economic incentives for any actor to participate in this balancing act for UST stability. And we feel like we’ve kind of been battle tested. UST has been in the market since late 2020. And with the launch of Mirror and Anchor, as well as some market volatility that we saw last May, as well as parts of late last year, as well as early this year, we’ve definitely seen our fair share of outflows as well as just stress on the swap mechanisms and UST has held pretty well. And I feel like the market trust in algorithmic stablecoin has definitely increased whereby UST’s market cap is I think around like $11.6 billion right now. We definitely want to grow that market share. And that’s, again, really the crux of what we’re here to do.
Chase @ ethdenver 7:56
You had kind of touch on that about how you guys have been really kind of battle tested. But I think from what I do know about Terra and the uniqueness of the minting function, could you kind of expand on how you guys can maintain the peg? ‘Cause I know that was kind of a narrative for a little bit before, kind of worried about the depeg occurring. I just think for people who may not have a really good understanding it would be really helpful to kind of understand the mechanics by that.
SJ Park 8:20
Yeah, so to go a little back a little bit more in depth to the swap mechanism. So LUNA is our staking asset, but also, essentially by design, whethers some of the short term volatility in the UST’s peg. So you can imagine if the swap mechanism on-chain allows users to exchange a dollar’s worth of LUNA for a dollar’s worth of UST and vice versa. What can happen is if for whatever reason there is a market event, and UST is trading above $1, a person can exchange a dollar’s worth of LUNA into what the market is determining as UST’s price, so $1.10, and sell it in that on-chain swap mechanism and capture that 10 cent arbitrage. And essentially, you’re burning LUNA as a result. Whereas if UST is trading at a discount, as you can imagine, LUNA would be minted to capture that arbitrage whereby UST is trading at $0.90 and you would essentially be buying the discounted UST on market and swapping it into a dollar’s worth of LUNA essentially. So this sets pretty interesting economic incentives for people to participate in this pegging mechanism. I would say that some of the other algorithmic stablecoins out there are designed in a similar way whereby there’s a secondary asset and almost like a derivative of the stablecoin to perform an act in this way. I think what separates us from other decentralized algorithmic stablecoins is the utility for UST.
SJ Park 9:59
So to give you a little bit more context into Terra, when Terra started back in 2018, we were focused on this concept of cryptocurrencies essentially performing the function of a currency and having a stable value. And in order to have some utility behind the stablecoin, we created something called Chai, which is an e-payment gateway in Korea that has right now, maybe a couple billion dollars worth of annual revenue, usage by more than a couple million users. There’s actually a Chai debit card and actually powers real world purchases, and on the back end, it’s really hooked up to the vendors and merchants. And the blockchain is essentially obfuscated from the users. But with that, it essentially created a stablecoin that is facilitating real world use cases. And then we saw an interesting opportunity as the Gamestop/WallStreetBets fiasco was happening, for there to be a problem in, one, the lack of access for other parts of the world to invest and trade in US assets, as well as there to be a more decentralized solution to equity markets, as well as other markets. And we created Mirror, which is our decentralized investing protocol. And then we shortly launched the Anchor, which is our high stable fixed savings rate protocol. And from these use cases, not only have we increased the utility and kind of the attractiveness of UST, but we also spurred a movement of sorts of people being inspired, and building on top of these protocols, and essentially, creating more use cases for UST.
SJ Park 11:47
So there’s more than 100 protocols building on Terra right now, I would say that, in addition to the layer one story, we are also very excited about the growth of Web 3 in general. I hate the term “Web 3”, but to the extent there’s going to be stablecoins denominating some of these activities, we believe that UST is the best stablecoin to do so. And at the core of the issue is if you’re using USDT or USDC, as I alluded to earlier, you’re using a “centralized stablecoin”, whereby your assets are not necessarily censorship resistant, because a dollar’s worth of the stable coins are held in, let’s say, financial intermediaries like banks or other market participants, which are easily… It’s easy for those to have attack vectors by governments and by other agents. Whereas for UST, there’s really no way to stop this mechanism. And we think decentralized finance should run on decentralized monies. And so far, UST is the best proven case of that.
Chase @ ethdenver 12:59
Yeah, that’s, that’s extremely interesting. And you had kind of touched on Anchor and I want to ask a question about that. And it might be a little bit too specific of a question and might be better oriented towards the team. But could you kind of touch on Anchor Protocol a little bit and give a high level view of how Anchor can pay that 20% APR on UST? ‘Cause for my understanding, that’s been a pretty long standing APR, if I’m not mistaken. I’m just curious what are the mechanics at play to ensure such a high return for people on their stables?
SJ Park 13:32
Yeah, so Anchor is like super interesting and super compelling because of… I feel like the elegance’s in it’s simplicity. So, essentially, what Anchor does is it acts as an intermediary between borrowers and lenders of liquidity. And essentially, to borrow liquidity on Anchor, you have to post up collateral, but the only types of collateral there are accepted are yield bearing assets. So essentially, you have collateral that’s producing yield, and what we are doing is passing for that yield on to the providers of liquidity. And as we… In the current stance right now, we have bonded LUNA and bonded ETH. The staking yield of these assets are, let’s say, in the high single digits. If you can imagine a borrower taking a 50% LTV or putting up $100 worth of collateral and borrowing $50 worth of of liquidity, you can imagine where if you can double the staking yield that is passed through the liquidity provider, you actually achieve double digit returns on savings. We currently support those two collateral types, but we’re very close to launching bonded SOL and other assets. So, as you can imagine if we expand the universe of assets that are taken into Anchor, and some of these assets are also higher yielding than, let’s say, LUNA or ETH staking yield, it’s totally feasible for Anchor to be self sufficient for a long time, but also to continue to generate this high fixed yield.
SJ Park 15:15
It’s just compelling, as I said earlier, because if you look at this savings yield of traditional finance products as rates are brought down to near zero or even negative territory by central banks across the world after COVID. And after, really, the financial crisis in a way, there’s nothing that competes with this. Maybe you can get high yields like this if you invest in very emerging market government debt, but it’s really unheard of. And I think once people realize the mechanism and the elegance behind it, it’s approaching a scale where it is Lindy, and I think there’s $10 billion of TVL right now and Anchor. We’re very excited for the protocol. And as we have additional initiatives that we are building on right now, we think that it can scale further.
Hey, SJ, I’m also curious around Terra’s governance system. Can you talk to us about that? And I’m curious if the everyday user can put through a proposal or is it kind of limited to the larger players within the Terra ecosystem?
SJ Park 16:23
Yeah, anybody can put up a proposal. And we have more than 130 validators who are essentially governing the DAO, if you will. One of the interesting proposals that passed recently was a partnership with the Washington Nationals. So I think that was the first DAO partnership whereby a government’s proposal passed for us to lock into a multi year agreement with the Nationals for marketing and exclusive access to their clubs, etcetera. But I would say that anything is fair game as long as there’s support for it within the community.
Yeah, I might be like a little naive here but is there a community pool that the DAO can tap into and say, “Hey, we want to execute on X,” or how are they actually getting the funds to go out and do these things?
SJ Park 17:16
Yeah, there’s a community pool. Some of that was depleted as we bootstrapped the growth of Ozone, which is now a part of Risk Harbor for providing insurance on some of the protocols that are built on Terra and expanding and kind of safe locking the Terra economy. But we have a community pool that is used for a lot of these proposals. And I think it’s under appreciated how powerful our community pool is. So I believe we have $2.2 billion of UST in our community pool, and maybe $0.5 billion dollars worth of LUNA in the community pool right now.
That’s pretty cool. Yeah, I did see the Washington Nationals news. I didn’t realize that that was a DAO vote. That’s pretty awesome.
SJ Park 18:07
Yeah and some other kind of recent proposals, and as UST is really at the core of what we do and we’ve had this vision for a long time for UST to not only be the currency for the Terra economy, but also all of DeFi. We’ve passed a lot of proposals recently, with majority support to get UST incentives on other chains. Whether it be Solana or Avalanche, Fantom, you name it. So I think that’s also a very effective use case for our community pool as well. And the DAO participating in it.
That’s super cool. Yeah. I’m a huge fan of DAOs, I love everything that other projects are activating with DAOs. And it’s really cool to see how you guys are applying it to Terra. I’m also super curious, your title is Special Projects, what exactly does that mean?
SJ Park 19:03
Yeah, yeah. So it’s interesting. My story, and I think some people may have heard this is, maybe early last year, I reached out Do because I was super enamored by what Do and the team were building. And I believed in division of having decentralized money in a decentralized economy. I spent a decade at Goldman before this, so I was a TradFi suit. And it was just super compelling what they were trying to do. So I hit him up on Twitter DM, and every time I did, I sent him a new idea of what we can build on Terra. And I think at the time he needed somebody to come in and help… As the community and the ecosystem was growing to help field a lot of that inbound that we were getting of builders who are trying to build on Terra, but also try to incubate and start projects on our own that seemed compelling enough. So I came on to help do that. And I think what is interesting about Terra is if you look at all other major players in this space right now, I think our mode, Terra’s mode is really innovation or us having been shippors of sorts, right. We built Chai, we built Mirror, and we built Anchor. And I think a lot of people drew inspiration from what we did. And even as we focus on a lot of these different verticals, let’s say, enhancing and making sure that UST is available everywhere in our cross-chain strategies, or that Terra is the best place to build on and we have thousands of builders on Terra. I think what we’re going to try to continue to do is continue this effort to ship protocols on our own. Whether it be that we incubate these projects internally, or we work very closely with founders who need the extra push to help launch and scale and to success.
Chase @ ethdenver 21:04
I’m actually curious, within your role as Special Projects, what is the appetite that you’re seeing from builders? Is it primarily DeFi? Are you seeing a lot of GameFi builders come too? What do the apps just generally across the board look like?
SJ Park 21:19
Yeah, I mean, there’s definitely a lot of DeFi protocols that are building on Terra right now. I would say that some of the opportunities in GameFi and other areas are are definitely very strong. I do think that some of those opportunities require a closer partnership or collaboration that we as TFL would be actively involved in. So there are larger opportunities with game publishers or with Metaverse platforms that we’re working on behind the scenes that I think will be released to the public over the next few months that are super exciting. As well as other protocols who are building fantasy sports protocols on Web 3 essentially or games like for instance, for the fantasy sports one, there’s been Fanfury, or there’s Playible being built on Terra. For games, there’s Derby Stars, which is a gaming studio that is created by Hashed, which is a longtime supporter and partner of ours. There’s other partnerships that are in the works that we will disclose in the coming months. And then yeah, DeFi protocols, just given the nature of what Terra is and our genesis, have always been a field of interest for us.
Chase @ ethdenver 22:39
Yeah, that’s awesome. And I’m curious, just a peek behind the curtain, if you will, are there any kind of upcoming projects that you know about that are kind of, what I would call, narrative changing? Is there anything that’s getting you really excited within your role to where you can’t wait for it become public?
SJ Park 22:59
Yeah. So there’s a bunch, right. We recently launched Prism, which is essentially bringing the idea of interest rate swaps on-chain and allows any yield bearing assets to be split into a principal token and a yield token. I think that can be really interesting. As you can imagine, a lot of DeFi is run on and operated on assets that are productive. So we started with LUNA as the collateral, but any LP token is fair game for Prism. In the future, when NFTs are yield bearing, they’re game as well. There’s a different protocol called Vertex, which is also super interesting, hopefully going to be in beta by the end of this month. So maybe just in two weeks, but it’s striking that there is no dominant non-US dollar pegged stablecoin. And when I alluded to earlier, Terra being a suite of stablecoins, while UST is our dominant one, we actually by design can… It’s trivial for there to be a Terra version of, let’s say, the yen pegged stablecoin, JPT, or the euro pegged stablecoin, EUT. And those exist except that they haven’t had the light of day because there’s just been so much concentration of liquidity and volume going through UST. Vertex Protocol is going to change that and change that in the same way by approaching it in a way in which you create utility for these non US dollar pegged stablecoins. So, they should be launching in a few weeks with FX perps as well as real world use cases, whereby if you live in India you can take INT which is the Indian rupee Terra stablecoin and deposit that into Anchor natively instead of having to swap into US dollar to deposit and then to redeem. And you can imagine that can apply to any other stablecoin. And ultimately, if you look at DeFi and everything being dollar denominated, at some point it has to change. And there’s going to be a Euro denominated market, there’s going to be a yen denominated market. So I think that’s super interesting.
Hey, SJ. I’m just curious. I saw on your website about the Terra Academy. And I know you had mentioned about gaming projects on Terra. So do you see more and more developers coming to code in Rust rather than Solidity? And could you kind of touch on, I guess, either similarities or differences between the two languages?
SJ Park 25:44
Yeah, so I would say that a lot of builders that come to Terra or people who have experience with other languages, like C++, and pick up Rust fairly quickly, from builders that I’ve spoken to, they like Rust in the sense that it is very logical. And really at the end of it, it’s more secure. So not only is Terra and CosmWasm built on Rust, but also, I believe, Solana as well. And I think that, I don’t know, maybe over the next couple of years, Rust may continue to pick up market share when it comes to languages for crypto, and for DeFi projects. I do think that there’s a lot that we need to do in terms of having the right tools, and like you mentioned, expanding Terra Academy so that when people want to build on Terra, and they don’t have prior knowledge of Rust, that they can pick it up very quickly. And we’re doing that. Obviously, we have Natalie Luu who joined recently to head up our ecosystem initiatives. And essentially, I think for the rest of the year, you will be seeing a lot of hackathons that Terra is part of but also coding bootcamps or other partnerships, whereby people who want to build on Terra can do so in a more structured and in a manner that’s more supported.
Sweet, sweet. And just a follow up question on that. So for some of the people listening maybe on Spotify or YouTube that are beginners and may want to get into the space, what are some pointers that you have for beginners to either get started coding or start working at Terra? Whether you have any positions open at Terra?
SJ Park 27:27
Yeah. So there is a HR/job site on our main website terra.money. If you’re curious about learning more about Terra, I would actually go to YouTube and just look up Terra Bites, because they have a lot of good helpful resources on getting started on building on Terra. So I think that can be super interesting. I would just reach out to any of us. We’re reachable on Telegram or on Twitter. So I think we’ll definitely be responsive to anybody who’s willing to build and kind of join the LUNAtic community. And yeah, I think we have a very passionate and supportive community as well. So if it’s not directly us, I know that there’s many group chats and Discord channels where people help each other build as well.
Sweet. Awesome. And then just my last question I have for you. So I’m familiar that you guys are integrated with Chain ink on testnet. Is there any timeline on when you’ll be integrated on mainnet? And if you could just speak on the partnership and what services you’re using with Chainlink.
SJ Park 28:39
Yeah, all I can say as soon, very soon. There are protocols that are due to launch that are dependent on various types of oracles so we’re very eager. And it’s going to be in the next few weeks. So it’s very soon. And I want to say that, as kind of the offering of the Terra economy grows, I think dependence on whether it be Chainlink, or Band, or Pyth will continue to increase as well.
Chase @ ethdenver 29:10
Actually, I had a question. You had kind of touched on at a really high level your strategy or expansion strategy for cross-chain. And just kind of on the topic of Chainlink, is Chainlink playing a role within your guys’ strategy of expanding cross-chain?
SJ Park 29:25
Yeah, so I want to say that most of our cross-chain initiatives are really built in partnerships with various types of dApps on other chains. So to the extent that they rely on Chainlink, I would say that Chainlink is an integral part to our strategy. I would say though, that right now a lot of what we’re seeing is at the very simplest form a desire for protocols to adopt UST as ideally their base asset. And Pangolin I think maybe last week announced that UST is going to be the default co-currency for their protocol. And I think we’re going to continue to see announcements like that where protocols that are building on DeFi continue to prefer building on a decentralized set of stablecoins.
Really, really great to see. SJ I know we kind of have to wrap up here. Any closing thoughts you want to leave the audience with while we have you on?
SJ Park 30:27
No, I want to say this is super brief, but I would love to connect with anybody who listened in and is curious. My DMs are open. I know there’s a lot of people in Denver right now for ETHDenver, I think, Eason and Doug from from TFL are there so hit them up. They’re super fun. And yeah, let’s take UST to $100 billion.
Let’s go. Chase I see your hands up.
Chase @ ethdenver 30:57
Yeah, I just want to say thank you SJ for your time. I know this was super brief. We really just I feel like started to barely even scratch the surface of Terra and all the things you guys are doing there so I just want to say thanks and hopefully we can have a more in depth conversation some point in the future. But I’ll be on the lookout for them at ETHDenver.
SJ Park 31:16
Awesome, guys. Yeah, let’s do like an episode two whenever we have time again.
Definitely. And plus one to everything Chase said as well. Thank you for taking time out of your day.
SJ Park 31:25
Okay, thank you so much.
Chase @ ethdenver 31:27
See ya. Stay based, SJ.
SJ Park 31:28
Thanks, guys. Enjoy,
Peace. Stay based.
Thanks for checking out another episode of The Ether. That was the Terra AMA with SJ Park, the Based Space. Recorded on Tuesday, February 15tg 2022. This episode of The Ether was brought to you by Orbital Command, a community validator on Terra dedicated to educating, expanding, and promoting the LUNAtic community. Have you heard about the new Terra Invest Strategy Discord server Orbital Command spun up? If you’re looking for a chill place to chat about different LUNA stacking strategies, or looking for some alpha, or if you’re trying to find the best UST farms, or even if you just have a quick question you need answered, be sure to stop by TIS and say hi to the Orbital Command gang. Hell, I’m even in there sometimes when I’m not editing hours of Cephii Spaces. You can find me in that server chatting about NFTs and answering basic Terra LUNA questions. The link to the server is in the show notes and for more information check out orbitalcommand.io. This episode of The Ether was also brought to you by Talis. Talis Protocol is the NFT platform for independent artists on Terra. Talis helps to provide artists with the tools and resources needed to transition from traditional arts into the NFT world. With their V1 launch coming soon, Talis will be the place to see real world art reflected on Terra. Be sure to join their Telegram and follow Talis on Twitter for updates on their roadmap, validator, and other Talis news. Find your next favorite artist on talis.art. TerraSpaces appreciates the support from all our sponsors. For terraspaces.org, I’m Finn. Thanks for listening.