Following the recent demise of the Terra ecosystem, many people wondered if the new chain would become successful. So far, that has not been the case, and any DeFi growth is being negated. It appears everyone has given up on this project for now, as the damage caused by UST and LUNA has not been forgotten.
DeFi On Terra Isn’t Going Anywhere
There is no reason to question the underpinning technology of the Terra network or Terra2 as it is now known. Nothing has changed in the approach for developers and the building of decentralized finance solutions in this ecosystem. After all, Terra represented tens of billions of dollars in Total Value locked not that long ago. It all went down the drain due to the UST and LUNA scandal and the alleged involvement of Terraform Labs in those proceedings.
As such, one would expect money to flow to Terra2 now that the new network has been up and running for a while. However, the community has seemingly abandoned that network, too, as its DeFi TVL is already coming down. It peaked briefly above $25 million – a drop in the bucket compared to the former glory of Terra – and is now heading to the low $20 million range again.
Moreover, the popular solutions that existed on the first network are still around today. Projects like Astroport, Risk Harbor, Terraswap, and Phoenix DEX are all present and accounted for. However, they all lost TVL this week, ranging from 2.4% to dropping by over 56%. Confidence in Terra2 is very low and doesn’t appear to improve anytime soon either. Moreover, it seems unlikely the network will ever play a big role in decentralized finance again.
LUNA Isn’t Recovering Either
While the DeFi woes do not always indicate a project’s health, there is very little excitement regarding Terra and Terra2 today. Looking at the value of LUNA – not LUNC or LUNA Classic – there is nothing to be overly happy about. The asset trades at $1.72, a far cry from its all-time high of $144 on the other network. Such a high value seems out of reach for the new asset on the Terra chain, as the public perception of this project is anything but superb.
All in all, it seems like Terra has lost all momentum in the crypto and blockchain space. There is still time and room to build on this technology, but one must acknowledge there is a severe trust discrepancy. Regaining that trust will be very difficult – if not impossible – after everything that has happened. It will be interesting to see what the future holds for Terra and LUNA, but things do not look too great right now.
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