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In a time where the crypto space is saturated with new coins and projects, Terra has been, without a shadow of a doubt, one of the standout names since it publicly launched back in late 2020. The main issue that the Terra blockchain seeks to solve, is the lack of decentralization among the prominent stablecoins on the market. To achieve this, it needs a strong and constantly growing ecosystem around it.

To visualize the hype and the constant growth of Terra, here’s a chart showing the fast increase in the staked supply of LUNA, which suggests a strong interest in staking and confidence in Terra's native token.

LUNA Staked Supply - USD

# Key Components
Let’s now have a look at the main components and protocols that serve as the backbone for the entire ecosystem.

## UST and Terra Stablecoins
At the core of the Terra blockchain, it’s the **TerraUSD** (UST), the _algorithmic interblockchain_ stablecoin. 

Unlike its competitors, UST is transferable between blockchains thanks to Terra’s interoperability and high scalability. For the time being, there are a total of 18 stablecoins running on Terra but this number can quickly change through governance proposals. 

The following chart demonstrates how the UST peg behaved over the past months.

UST Peg Variance

## LUNA Token
The LUNA token is the native coin for the Terra protocol and it ensures the stability of the stablecoins by functioning as collateral. 

Since Terra is a [_Proof of Stake_](https://academy.binance.com/en/articles/proof-of-stake-explained) blockchain, LUNA also works as an incentive to validators that ensure the security of the system (more on this later).

## Anchor, Mirror, and CHAI
There are 3 protocols that kickstarted the Terra project and are a vital part of the ecosystem itself:

* **CHAI:** payment app widely used in South Korea completely built on the Terra blockchain. CHAI's adoption carried with it a huge inflow of users and capital.
* **Mirror:** through Mirror's web app, the Mirror protocol enables the creation of synthetic assets called Mirrored Assets. They mimic the price behavior of real-world assets but give traders a very smooth and fast experience, with low transaction fees, all of it without having to own any real asset. It took only 3 months for Mirror to reach a TVL of **$1B**.
* **Anchor:** [savings protocol](https://app.anchorprotocol.com/earn) with an outstanding yield of 20% APY. Anchor also allows users to borrow UST (collateralized by [bLUNA](https://docs.anchorprotocol.com/protocol/bonded-assets-bassets/bonded-luna-bluna)) and incentivize an early use of the protocol by distributing rewards to borrowers as Anchor (ANC) tokens. Below is an overview of loans, liquidations, repayments, and amounts borrowed since Anchor’s launch in March 2021.

Anchor History

### Terra Station, Staking, and Airdrops

The Terra Station can be downloaded from the official website and allows users to access and manage their wallets. This is also the place where LUNA can be staked to accumulate rewards while securing the blockchain. Another amazing perk of staking LUNA is the access to weekly airdrops. Here’s an overview of daily rewards distribution to validator nodes (as total USD).

The following chart also shows how the ratio between the total supply of LUNA and the amount staked changed over time. It’s a clear sign of a healthy ecosystem with a very active user base.

USD Rewards Distribution

### Token Swapping

Swapping Terra tokens on-chain and even cross-chain (porting tokens to other blockchains) has never been easier.

* [TerraSwap](https://terraswap.io/)  is the current protocol that allows users to swap any token by implementing liquidity pools on Terra. This is soon going to be replaced by the newly announced AMM [**Astroport**](https://astroport.medium.com/introducing-astroport-a-next-generation-amm-on-terra-119d94a061e4). For an in-depth overview of swapping on Terra, here’s a [dashboard](https://app.flipsidecrypto.com/dashboard/analysis-of-terra-swaps-s9x7DZ) that analyzes exactly that.
* Cross-chain transactions are executed using the Terra built-in [bridge](https://bridge.terra.money/). It currently supports _Ethereum, Binance Smart Chain, and Harmony_, but new blockchains are going to be added in the near future.

# Terra Token Flows

This chart shows how token volume has flowed into and out of Terra stakeholder groups over time.

Choose buttons below to see flows for different stakeholders, and filter by currency:

To see flows *between* specific stakeholder groups visit the [Stakeholders](/terra/operational-data/stakeholders) page.

# Conclusions
It goes without saying, Terra is a thriving project and it’s showing no signs of stopping anytime soon. New protocols get launched on a regular basis and it is just the beginning.

We don’t have enough space to cover everything related to Terra, so here’s a list of resources for a more in-depth look at different topics:

* [Go-to for everything Terra](https://docs.terra.money) - official docs & huge collection of resources covering every aspect of the ecosystem
* [Learn-terra](https://www.learn-terra.com) - website to learn about Terra and to stay up to date with the community
* [Official Terra Twitter account](https://twitter.com/terra_money)

Overview

Terra is home to 2.6M+ users with an average of 70,000 monthly active users. For a relatively new project, these figures hint at some utility on Terra. The total number of users is expected to rise as an average of 2,000 new users troop to the Terra blockchain every month. 

The driving force for new user activity on Terra varies but the basic thing for new users to do is to get some LUNA, the native token of the Terra ecosystem, and swap for stablecoins.

Daily Swap For LUNA/UST - New Users

UST, Terra’s most notable stablecoin export, sees daily demand from new users. At peak demand, new Terra users made over 3,000 LUNA swaps for UST in a single day. 

Users who find Terra useful are likely to hold long-term positions by staking - bonding LUNA to validators who participate in consensus and being rewarded in fees.

The beginning of 2021 saw a continual increase in staking supply until peaking at 6.5billion USD in March 2021. Although there has been a zigzag pattern since then, the movement suggests a strong interest in staking.

Transactions per token

Every activity on the Terra blockchain is a transaction. Transactions are linked via unique identifiers known as Terra addresses. 

In a typical money market, the frequency and volume of transactions is an indicator of adoption. 

Among the Terra ecosystem of tokens, UST is the most adopted by average daily transaction count. KRT comes in second place, followed closely by SDT. LUNA trails with the least average transaction count.

Total Transactions on Terra

Terra rewards network participation with transaction fees in the form of gas and taxes. Taxes are collected as stability fees ranging from 0.1% to 1% of every transaction and capped at 1TerraSDR. Gas fees are set by validators in order to deter spamming on the network.

Terra Fees by Denomination in UST

The time graph below shows the fees paid for transactions in each stablecoin in UST over the last 30 days.

Daily Total Fees in USD

As more applications and protocols launch on the Terra ecosystem, we will see this continue to increase.

Usage

The core of Terra’s operations is to provide price-stable tokens. This is achieved through a process called seigniorage where LUNA supply is contracted or released to maintain a stablecoin’s peg.

Circulating Supply

Validators play an essential role in Terra by participating in consensus through staking. Staking bonds LUNA to a delegator and a validator and cannot be freely traded. Observe Terra’s staked supply and how it changes over time. The chart suggests a significant increase in staking supply amid peaks and troughs. To buttress the point of increase in staking supply, the exhibit below shows the number of Terra users staking LUNA.

Addresses Staking LUNA

With over a million addresses staking LUNA since February 22, 2021, it is imperative that half or more, of the Terra community, are invested in long-term positions on Terra.

Daily Rewards - USD

On average, ~40,000 USD is won by validators for supporting the Terra ecosystem. Rewards are distributed to validators at the beginning of each block for the previous block. The chart above is calculated to the most recent complete day.

With rewards being distributed pro-rata by stake, the following chart breaks down the distribution of rewards among the top 10 validators.

Top 10 Validators by Rewards

As expected, the top 10 validators dominate rewards won over the last 30 days. The table below shows the total figures and the percentage share of total rewards for the top 10 validators.

In the past 30 days, the top 10 validators claimed ~55% of total rewards disbursed.

Operation

Applications built on Terra are decentralized and drive widespread adoption of the Terra protocol. Decentralized apps (dApps) are smart contracts representing an application, game, or protocol.

New Mirror User Inflow - Daily

The inflow of new users into the Mirror protocol follows a zig-zag pattern with occasional spikes after steadily increasing after launch.

New Anchor User Inflow - Daily

New users for Anchor were notably high in the first few days which suggests that much of the existing Terra community bought into the stable 20% yield value proposition. 

With new users flowing into Mirror and Anchor progressively, it is worth finding out if users are dormant or actually using the applications. The charts below show the cumulative daily interactions on Mirror and Anchor respectively.

Mirror Cumulative Daily Interactions

The growth of daily interactions appears to happen in a linear fashion. This suggests a steady adoption of Mirror and Anchor protocols. (Anchor data below.)

Anchor Cumulative Daily Interactions

A core addition to Terra's suite of dApps is TerraSwap, an automated market maker (AMM) which utilizes liquidity provided by users to facilitate asset swaps for users.

Daily Swap Value (USD) on TerraSwap

Observing the daily swap volumes on TerraSwap in the chart above, we can conclude that dApps are providing utility and driving adoption in the Terra ecosystem.

Applications

# Exchange Flows

These charts show how much Luna is being deposited and withdrawn between Exchanges and other stakeholders, including volume and transactions over time.

Exchanges are influential ecosystem stakeholders for liquidity and market maturity. As new investors and users onboard to Luna, expect to see more withdrawals (outflows) than deposits (inflows), and vice-versa.

Choose buttons below to see flows between Exchanges and different stakeholder groups, and filter by currency:

Volume

Transactions

# Top Holder Flows

Top Holders, or whales, are key stakeholders in the Terra ecosystem. Where are whales moving their large bags?

Choose buttons below to see flows between Top Holders and different stakeholder groups, and filter by currency:

# Operator (Validator/Delegator) Flows

Operators play a central role in the Terra blockchain's consensus by running a full node and validating transactions on-chain. Luna token holders delegate their Luna to validators to stake.

Choose buttons below to see flows between Operators and different stakeholder groups, and filter by currency:

# dApps Flows

dApps on Terra are collections of one or more smart contracts that represent an application, game, or protocol on the Terra blockchain.

As Terra's tokens are used within the ecosystem expect to see more inflows than outflows.

Choose buttons below to see flows between dApps and different stakeholder groups, and filter by currency:

Stakeholders

Operational Data

As an ecosystem, Terra consists of 17 algorithmic stablecoins based on the national currencies of 17 countries, all of which gain stability from swap arbitrage and seigniorage of Terra’s native staking token LUNA. In terms of stablecoin labelling, the Terra counterpart of a currency replaces the third letter of the original currency with the letter ‘T’. USD becomes UST, KRW becomes KRT, and so on.

Variance from Peg (UST)

The variance from peg is easily one of the most important metrics for a stablecoin, as it determines how stable it truly is. Specifically with Terra’s interconnected ecosystem, if one stablecoin shifts substantially away from its 1:1 peg with its national counterpart for a long period of time, the entire ecosystem can be put at risk.

Between similarly positioned stablecoins pegged to the same underlying asset, differences in variance from peg can be a factor that warrants the use of one over another for long term capital storage.

As compared to the KRT and UST analysis on the last chart, we see the impact that recency and more limited use cases has on JPT, SGT and AUT through an inherently lower liquidity. The oracle updates less frequently for these coins, making variances from peg more impactful than for UST and KRT.

The increased variance from, especially in the case of AUT (which hit almost 2 AUD with the recent LUNA surge) incentivises arbitrage, which in turn reduces the variance from peg on the next oracle update.

Token Velocity

Token velocity is total transaction value divided by the average network value, and is used to gauge non-trading consumer activity. This chart thus shows how often each stablecoin is used by showing its average number of turnovers in a 30 day period. If additional tokens are minted into the market this could lower the velocity and provide additional liquidity. A higher velocity generally indicates a strong demand in the market.

Terra Token Cash Flow

The token cash flow measures the amount of fee income (in USD in this case) generated by each delegated token on a daily basis. The cash flow is then distributed to delegators and validators in the form of their rewards.

In a formulaic sense, the equation for the Daily Cash Flow is that the Total Daily Reward distributed / Total Delegated Supply * 100 = Daily Cash Flows standardized in $USD.

Vested vs Non-vested

This chart displays the amount of Luna and SDT tokens have been vested (unlocked) compared to the tokens that are not-vested (locked) from being used in the market.

Staked vs. Unstaked

LUNA, as the Terra ecosystem’s native staking token can either be in a staked state or an unstaked state. When a quantity of LUNA is staked to one of ~115 validator nodes, it actively earns rewards from transaction validations done by the validator. The quantity of rewards is based on the original quantity staked, and the quantity staked is also subject to a 21 day cool down to be unstaked. LUNA can also be in a liquid state, where it is entirely free to be traded or swapped, but does not earn staking rewards.

Token Prices

Swaps are uniquely critical to Terra’s stablecoins by offering an opportunity for arbitrage, which helps to maintain price stability for Terra’s 17 algorithmic stablecoins. In the Terra ecosystem, there are two main ways to swap across Terra tokens and stablecoins: natively through Terra Station, or through Terraswap, which is an Automated Market Maker which is modelled after Uniswap. Native swaps are subject to taxation and possibly higher fees.

Terraswap Volume

This chart specifically measures the volume in USD that is swapped using TerraSwap (as opposed to native swaps in Terra Station) on a daily basis. 

The Terraswap Volume is broadly aligned with the native swap volume trendwise, though TerraSwap volume seems to fluctuate more with changes in LUNA, as larger volume transactions centered around profit are run though Terraswap rather than native swap to minimise fees and tax.

The swap spread demonstrates the difference in price during a swap of a stablecoin to Luna and vice versa, which is a crucial determinant for TerraSwap arbitrage. The swap is algorithmically controlled by Terraswap.

Top 5 Native Swaps vs. Top 5 Terra Swaps

We can clearly see that native swaps are getting much more volume in every pair, while terra swap gets a decent amount of volume for the LUNA-UST pair, but not much otherwise.

LUNA-UST is the top pairing for both swap platforms as shown by the first two charts. Interestingly, there are 6.127 trades per address on the native swapping platform as compared to 2.607 trades per address on terraswap.

## Swap Spread  

The swap spread demonstrates the difference in price during a swap of a stablecoin to Luna and vice versa. The swap is algorithmically controlled by Terraswap.

Swaps

One of the Terra Ecosystem’s most critical tokenomic tenets is the levered unit mining rewards, where if unit mining rewards are increasing: fees and Luna seigniorage decrease to dampen this increase. The opposite takes place as well to stabilize the unit mining rewards over time. Crucially, the proposed columbus-5 mainnet upgrade will change the tokenomic implications of tax rate, which is mostly only worth looking into on a theoretical basis until the changes take place.

Tax Rate over Time

There are also two kinds of Tax on Terra. Default tax rate is the extra percentage paid for transactions on chain. Effective tax rate only occurs when your transaction value is greater than the capped 1 SDR default tax rate.

In a similar sense to gas fees on ETH, Terra has fees on each transaction that constitute the yield that LUNA validators and delegated users earn. A crucial distinction between Terra’s fees and ETH’s gas fees is that users can choose the Terra stablecoin with which they pay their fees. 

Crucially, the daily fees for KRT are higher (even when converted to USD) than LUNA, UST, and SGT because of Chai, which is a relatively popular South Korean electronic payment system that runs on Terra.

Adding onto the last chart, we also see the effects of Mongolia’s adoption of Chai when comparing the fees paid in MNT to the fees paid in the other Terra stablecoins that were released alongside MNT (AUT and JPT in particular)

We also see that KRT and MNT fees are relatively inelastic to LUNA price fluctuations as compared to UST and LUNA fees. This is uniquely critical to the Terra ecosystem’s stability in comparison to other algorithmic stablecoins and their ecosystems, as there is no single narrative or reason for exiting the ecosystem, which prevents the sort of rapid and substantial capital flight that typically characterizes a rug pull.

Tax Rate

Financial Data

All of the charts in this console were built by members of the Flipside community.

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Our data platform addresses the specific pain points of analysts like us -- providing custom built datasets and solutions that enable anyone to answer the questions that are important to protocols like Terra.

Our community of analysts earn tokens through our [bounty programs](https://www.notion.so/teamflipside/Flipside-Crypto-Bounty-Programs-8a6400e3d85049b79875d5200206974e).

Cumulative Terra Bounty Submissions and Participants

Native Token Recycling — Cumulative Terra Bounties Paid in LUNA to Community

Native tokens allocated for our bounty programs go back into the ecosystem - making bounties a direct investment towards attracting new users and increasing liquidity.

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