Terra has established itself as an attractive source for non-dilutive revenue for validators.

Terra has established itself as an attractive source for non-dilutive revenue for validators.

September 25, 2020 Decentralized Finance DeFi 0


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Contributor: Christopher Heymann, Partner at 1kx

  • After being live now for 17 months on mainnet, Terra has established itself as an attractive source for non-dilutive revenue for validators. Currently, 54 validators from 18 nations provide security to the Terra network, with a fairly even distribution between North America, Europa, and Asia.

  • Terra continues to have a robust staking ecosystem. Peak delegation activity since Columbus-3 was launched occurred in the week of June 14, 2020, when 35 million LUNA (~$10.5m at today’s prices) were bonded. Total delegations have increased from 172 million LUNA in December to now over 298 million LUNA, an increase of 73% in delegated tokens.

  • A significant concern for any Proof-of-Stake network is the concentration of delegations with just a few validators. Monitoring the voting power of the top validators in comparison to the whole network is therefore crucial. Low commission rates can quickly concentrate a lot of delegation power – not only is this important for 51% attacks, but also for governance, which requires a 30% quorum. Terra has, therefore, made it a high priority to promote new validators and those with little delegation. The result is that the concentration of the top 10% and the top 20% of all validators has continuously declined over the last six months.

  • An active and engaged validator community is crucial for the security of a PoS network and for building out the necessary tooling infrastructure. Terra has supported these efforts with a few grants. Here are a few examples:
    • Due to the immense activity on the Terra network, it is very challenging to synchronize a new validator. An archival node for Terra requires almost 1 TB of data already. ChainLayer has built Quicksync, a tool to download the latest snapshots to solve this problem.
    • To monitor the purchases happening via Terra and specifically the Chai wallet, DSRV Labs has built ChaiScan, an explorer for anyone interested to dive deeper into merchant-specific data.
    • Infura is an incredibly important tool for any Ethereum developer, and Figment is building something equivalent for Terra, DataHub.
    • Monitoring delegations and large fund movements can be a crucial tool; DSRV Labs has built LunaWhale to do precisely that.


Altcoins Survey

We collected 22,724 effective responses during the course of the survey. The main takeaways from the survey are listed below.

Key Takeaways:

  • Most respondents held altcoins (83% in total). Among these altcoin holders, 27% of them were altcoin maximalists (only hold altcoins) and 73% held both Bitcoin and alts;
  • “Decentralized Finance” (59%) and “Payment” (54%) were utilities that respondents were most interested in. It seems that the recent growth in DeFi has raised people’s awareness and interest;
  • The three most popular altcoins were Ethereum (ETH), Crypto.com Coin (CRO) and Ripple (XRP);
  • 66% of respondents recently bought altcoins and only 2% believed that it is time to sell. The demand for altcoins (and crypto in general) is very strong at the moment;
  • Respondents mainly held altcoins for long-term price appreciation (66%) and staking rewards / to earn interest (55%);
  • 44% of respondents believed that we are already in alt-season, 27% said “soon”;
  • 63% of respondents believed that altcoins will eventually overtake Bitcoin in market cap. On the contrary, only 19% answered “No, never”. Overall, our respondents seemed to favor altcoins over Bitcoin.