BUSAN: Do Kwon, the co-founder of South Korean blockchain project Terra, says more than 160 projects will launch on the protocol by early next year, placing upward pressure on the price of the network’s native LUNA token.
In comments provided exclusively to AsiaMarkets, Kwon credited the sudden surge in developer activity to a “smooth” upgrade of the Terra network to what’s known as ‘Columbus-5’ in September.
“Now that Columbus-5 is live, more than 60 projects are preparing to launch in the next six to eight weeks and more than 100 have recently announced plans (for) the end of the year or early 2022,” Kwon said.
“More projects on Terra diversify and amplify the demand for (our stablecoin) UST, accelerating the expansion of the stablecoin supply and accruing value to LUNA holders.”
What is Columbus-5?
Columbus-5 is the latest Terra mainnet upgrade and the most significant since the launch of the Terra protocol.
“We’ve been working on Columbus-5 since the beginning of the year, which required numerous upgrades to Terra core,” Kwon said.
“The transition was really smooth and the result of tireless efforts from the engineering team at Terraform Labs, third-party developers and projects, partners, validators, and other individuals to ensure that such a massive upgrade was executed precisely.
“Mainnet upgrades are a non-trivial task, so we’re thrilled with the outcome.”
Kwon says that moving forward, Columbus-5 provides several scalability and interoperability enhancements to the Terra protocol.
“It also updates some of the economic mechanics of the protocol so that 100% of seigniorage generated by the expansion of the UST supply is burned, augmenting the per-unit value capture of LUNA as the demand for UST grows,” he said.
UST stablecoin growth
Earlier this year, Kwon predicted the market cap of the UST stablecoin would exceed US$10 billion by the end of 2021.
At the time of publication, the figure stands at only $2.7 billion, but Kwon insists his ambitious target is still achievable.
“Dozens of projects native to Terra have been anxiously awaiting the launch of Columbus-5 to release their mainnet versions of their applications,” Kwon said.
“Secondly, regulatory action against centralized stablecoin incumbents like USDC and Tether (USDT) has reinvigorated the emphasis for a decentralized stablecoin in crypto like UST.
“As custodial stablecoin models do not scale well and serve as hubs of risk in a decentralized financial stack, we expect increased adoption of decentralized stablecoins to increase in the coming months and years.”
Kwon also pointed to the launch of IBC, and Wormhole support for Terra, which will enable UST to be exported to any IBC-enabled chain, particularly Cosmos chains like the Cosmos Hub, Akash Network, Secret Network, and ThorChain.
“For AMM protocols like Osmosis on the Cosmos Hub, UST is in high demand as the premier stablecoin option for base pools on DeFi apps – where UST can flow freely outside of Terra,” Kwon said.
“Similarly, Wormhole is a cross-chain bridge to Solana, Ethereum, and Binance Smart Chain (BSC), that enables Terra assets like UST to be seamlessly ported to some of the largest chains by TVL and users in the entire industry.
“We fully expect the demand for UST in cross-chain environments to accelerate the expansion of the UST supply further, potentially reaching the $10 billion market cap mark by year’s end.”
LUNA price outlook
LUNA’s price has risen by more than 11,000% in the past 12 months, but Kwon expects there could be more growth to come.
Not surprisingly, the Stanford University graduate didn’t mention any specific numbers, but did refer AsiaMarkets to a detailed report by microeconomist Murray Rudd, who predicts a LUNA price of $250 by the beginning of 2022.
Kwon says the main driver for growth will be demand for the stablecoin UST.
“UST demand will be transferred from investing, yield farming, and trading apps to savings protocols during market volatility, helping solidify demand for UST even during extreme market conditions,” he said.
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