Following the implosion of TerraUSD (UST) and the LUNA currencies, it is not surprising to see DeFi activity on the network fall off a cliff. It is a matter of time until developers begin exploring alternative networks to reach an audience. It appears the demise of Terra is all but complete at this point.
Bye Bye Terra DeFi TVL
There is little confidence in the Terra ecosystem today. That is perfectly normal, as the project’s stablecoin has imploded and trades at less than 10% of its peg. Moreover, the LUNA currency is in the dirt, and there is a heavily inflated supply no one can address. Proposals to fork the network are both idiotic and not well-received by the community, leaving many people holding the bag.
Unfortunately, it now appears the DeFi ecosystem is bailing on Terra too. Although the technology still holds merit, there is little or no confidence in this project moving forward. The developers are still looking for ways to restore order, yet everyone else is choosing to explore other pastures. Things have come to this after such a successful run, but this is a very unforgiving industry.
Per DeFiLlama, the current DeFi TVL on Terra represents just over $166 million. That is another 23.39% decrease in the past day. More importantly, the TVL has decreased from over $29 billion to this level in a matter of weeks. There seems no option to recover this lost value, as all protocols note strong capital outflows. The ongoing declines of UST and LUNA will not help matters either, although everything running on Terra has been tarnished due to the recent incidents.
Anchor remains the leading DeFi protocol despite the onslaught, which is rather intriguing. Although it has lost nearly 93% of its Total Value Locked this week, it still represents over 66.7% of Terra’s DeFi TVL. Risk Harbor and Astroport now complete the top three and are the only other protocols with over $10 million in Total Value locked today.
Some Pushback But Will It Matter?
Surprisingly, two decentralized finance protocols note growth this week. It is uncanny how these two may try to survive on Terra, although its developers may want to explore additional opportunities. Both PRISM Protocol and TerraFloki have a positive Terra DeFi TVL increase this week of 180% and 12.72%, respectively. That latter figure is pretty standard, yet 180% raises many questions.
However, one must consider the impact on these changes. Even with these gains, PRISM represents a mere $1.8 million – of which 99% is locked in staking – and TerraFloki sits at $68,721. Neither of these projects will make much\of an impact unless the developers somehow rekindle trust in Terra. That seems rather unlikely, as everyone wants to move on from this disaster as soon as possible.
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