Terra's Unlikely Resurrection Bid

Signs of Life? Many in crypto wrote off Terra as a failure after its collapse in May 2022, but signs of life are emerging onchain! Terra Classic (LUNC) and Terra2 (LUNA) have both experienced massive increases in TVL, up 350% and 610%, respectively, over the past month. Can what is dead truly ever die?

While Terra Classic’s muted $6.9M in TVL pales in comparison to its pre-collapse high of $20.3B, Terra2’s $33.4M in TVL is within a stone’s throw of its $55.5M all-time high!

Nearly 50% of Terra2’s TVL is liquidity provided by the Terra-Luna Foundation (TLF) for LUNA pairs on Astroport and Ura, an infusion the TLF hopes will attract DEX aggregators to the chain, increasing transaction volumes and leading to greater yields for LUNA stakers.

With much of last month’s increase in LUNA TVL attributable to the TLF, there remains plenty of reason to be skeptical about the Terra ecosystem, yet should the TLFs efforts prove successful in attracting organic TVL and usage to LUNA, renewed interest could help propel the token higher.

Additionally, despite LUNC’s TVL being stuck to the lower bound, its reflexive tokenomics should not be discounted. LUNC’s algorithmic stablecoin design was key to the chain’s success last cycle; restarting this flywheel and closing the discount-to-peg on UST could kick off massive growth for the chain!

Without a doubt, LUNA and LUNC both have difficult paths ahead to emerge from the depths of crypto relegation, but green shoots of life on both chains indicate you should keep your eyes attuned to the Terra opportunity.