Recap AMA VIC Group x Terra

👉 Part 1 : Basic Introduction of Terra and Guest Daniel Hwang, Head of Ecosystem Development of Terra
👉Part 2 : Guest Daniel Hwang, Head of Ecosystem Development of Terra will answer VIC GROUP (https://t.me/xoadoigiamngheo) questions
👉Part 3 : Guest Daniel Hwang, Head of Ecosystem Development of Terra will answer community questions. People can post questions ( form (https://forms.gle/Hbkems8L4Pa1chV18) )
👉Part 4 : All members can ask the guest directly.

TieuMai: hello @Hwangarang are you ready ?

Daniel Hwang: yep!

TieuMai:

Today’s AMA we will have Guest Daniel Hwang, Head of Ecosystem Development of Terra.

Part 1: The guests introduce themselves, and then the representative from VIC will give 6 pre-prepared questions for the guests to answer.

Please @Hwangarang briefly introduce yourself and about the Terra project.

Daniel Hwang:
Sure,
Hello everyone! I am the Head of Ecosystem Development, I manage the ecosystem verticals of 3rd party development, validators, community, and research. As someone who has worked with the general adoption of cryptocurrency since 2013 from the extremes of digital/crypto-natives to users exploring different options for remittances in filipino fishing villages, I have had exposure to the many domains that can and have been impacted by the benefits of blockchain. My joining of Terraform Labs stemmed from understanding the problems that the developer communities have been working on. From Terra’s emphasis on exposure to non-crypto natives, I have been working to continue the mass adoption of Terra’s products from the CHAI payments app that has successfully reached almost 2 million users, the launch of Anchor transforming the interchain DeFi space, to many more products which will give users the opportunity to be exposed to this transformative technology.

I graduated from Johns Hopkins University with a M.S. in Computer Science where I focused on cryptography and health technology applications. I also have a bachelors degrees in Computer Science from the University of Maryland, College Park and Biology and Religion from Swarthmore College. I got his start in cryptocurrency as a miner in 2013.

TieuMai:
You can introduce more about the Terra project @Hwangarang.

Daniel Hwang:
Terra is building new financial infrastructure that works better for everyone. The network is powered by a family of stablecoins, each pegged to major fiat currencies all algorithmically stabilized by Terra’s native governance and staking token, Luna. Terra’s mission is simple: set money free by building open financial infrastructure.

Luna, as the native staking asset from which the family of Terra stablecoins derive their stability, utility, and value, acts both as collateral for the entire Terra economy and as a staking token that secures the PoS network. Luna can be held and traded as a normal cryptoasset, but can also be staked to accrue rewards in the network generated from transaction fees. Luna can also be used to make and vote on governance proposals.

The family of Terra stablecoins achieve stability through consistent mining rewards with a contracting and expanding money supply. For example, if the system has detected that the price of a Terra currency has deviated from its peg, it applies pressure to normalize the price. Currently, the family of Terra stablecoins include: KRT (Terra stablecoin pegged to Korean Won), UST (Terra stablecoin pegged to US Dollar), MNT (Terra stablecoin pegged to Mongolian Togrog), SDR (Terra stablecoin pegged to IMF SDR), with more being added in the future.

The power of multi-chain operable smart contracts is a key feature that Terra has also been working to add. Powered by CosmWasm, these smart contracts are able to interoperate natively with the ecosystem of Cosmos blockchains with IBC (InterBlockchain communication). These smart contracts leverage the speed of WASM and the power of Rust and securely address most known attack vectors seen on Ethereum.

Terra has made enormous strides in mass adoption within payments space from the Chai payments app built on its platform. Chai has risen to become one of the most popular applications built with blockchain with over 3% of the South Korean population using Chai to pay for goods and services ranging from Korea’s #1 online travel agency, #1 bookstore, #1 gaming publisher, #1 convenience store, the top e-commerce sites, and many more. As of August 2020, Chai currently has over 1.9 million users, an annual run rate of $1 billion, and has shown an average retention rate of over 80% when used with multiple merchants.

Terra will also be launching Anchor. Anchor is a DeFi protocol that leverages the block rewards of every major PoS blockchain to power yields on stablecoin deposits. Anchor aims to become the “gold standard for passive income in blockchain.” It will be offering principal protection, instant withdrawals, and a steady and high APR.

The Terra ecosystem has approached and achieved mass adoption that has resulted from solid go-to-market strategies with strong mechanism design. This has resulted in over $78 million in transaction fees within a 3 month period, over $25 billion GMV exposed to the over 1.7 million users on Chai, and placing 3rd in total transaction revenue only behind that of Bitcoin and Ethereum.

When Terra was created in January 2018, it had the singular vision of facilitating the mass adoption of cryptocurrencies by creating digitally native assets that are price-stable against the world’s major fiat currencies. Keeping in mind that previous innovations in the technology of money was bootstrapped by large payment networks (Alipay with Taobao, Paypal with eBay, Visa with banks), Terra was born with the support of the Terra Alliance, 15 large e-commerce companies in Asia that collectively process 25 billion USD in annualized transaction volume and 45 million users. The vision of the project is that with the adoption and user engagement of a massive payment network, it will be able to, for the first time, bootstrap a blockchain payment network to the scale it deserves and facilitate far more powerful products and use cases through its infrastructure.

TieuMai:
Thank you @Hwangarang for introducing interesting information to everyone participating in AMA today to understand more about the Terra project.

Here on behalf of the VIC community I will have a few questions for you, are you ready

Daniel Hwang:
Yep!

👉Part 2 : Guest Daniel Hwang, Head of Ecosystem Development of Terra will answer VIC GROUP questions

TieuMai:
Question 1 : Is Terra a single stablecoin or a basket of stablecoins? What is Luna?

Daniel Hwang:
Great question

Terra has a basket of stablecoins

Each of these stablecoins are pegged to a fiat currency

Currently we have stablecoins pegged to USD, KRW, MNT (Mongolian Togrog), and SDR (IMF reserve)

Luna is the stabilzing asset used to collateralize these stablecoins and it is used as Terra’s native governance and staking token

As Terra stablecoin stabilization is done algorithmically, as Terra stablecoin demand increases, more Terra stablecoins must be minted and in the process, Luna is burned — decreasing the supply of Luna

TieuMai:
Thank you and here is the next question

Question2: What makes Terra different from other stablecoin projects like Tether and MakerDAO?

Daniel Hwang:

Tether is directly collateralized with a 1:1 reserve and makerdao is overcollateralized with particular reserve assets

Terra is algorithmically stabilized

Here is how Terra’s stability mechanism works at a high level:

> Terra has a family of stablecoins each pegged to a specific fiat currency. The stability mechanism for Terra’s family of stablecoins involves supply adjustment according to demand. Let’s use KRT (Terra’s Korean Won pegged stablecoin) as an example.

:small_orange_diamond: Let’s say that demand for KRT increases and it causes KRT price to increase and stray above its KRW peg. To bring back KRT price to its appropriate KRW peg, Terra’s system incentivizes arbitrage opportunities to increase the circulating supply of KRT. (An increase in circulating supply of KRT dilutes the value of KRT and can bring back the appropriate price peg).

> This is achieved by allowing users to send the system 1 KRW worth of Luna (Luna burn) and receive 1 KRT (newly minting KRT and generating seigniorage), increasing the KRT supply. The price difference from how far KRT had deviated from its peg is reflected in profit for the user if they choose to sell their purchased KRT (at real KRW price) on an exchange. This mechanism thus incentivizes natural arbitrage opportunities to allow more KRT to enter circulation and bring back the KRT peg.

> Now, let’s say that demand for KRT decreases and it causes KRT prices to decrease and stray below its KRW peg. To bring back KRT price to its appropriate KRW peg, Terra’s system similarly incentivizes arbitrage opportunities to decrease the circulating supply of KRT. (A decrease in circulating supply of KRT increases the value of KRT and can bring back the appropriate price peg)

> This is achieved by allowing users to send the system 1 KRT and receive 1 KRW worth of Luna, decreasing the KRT supply. Users can make a profit by buying 1 KRT from exchanges and selling it to the system, receiving 1 KRW worth of Luna in return. This reduces the circulating supply of KRT at the cost of diluting the Luna supply, ensuring that the peg is maintained.

> From the system side, Terra price making is done via Luna. For the system to buy 1 KRT, the protocol will mint and sell 1 KRT worth of Luna. For the system to sell 1 KRT, the protocol will earn 1 KRT worth of Luna.

TieuMai:
Question 3: Is Terra fee-based or inflation-based? What is the reasoning? @Hwangarang.

Daniel Hwang:
Terra operates on a fee-based model. There are significant benefits for a fee-based model for the Terra ecosystem and network.

As it has been recently disclosed. Terra ranks just 3rd behind that of Bitcoin and Ethereum in accumulated transaction fees — more than $4.3 million in fees to date with more than $800k generated in rewards for Terra validators. What is important about a fee-based model is its presentation of objective valuation vs that of an inflation-based one. From the CHAI app that uses the Terra blockchain for transaction and settlement, real external value of actual consumer to merchant purchasing is being represented on the blockchain. These real transaction fees are instrumental to real valuation as well as network security.

Transaction fees represent value that is captured externally as we have with CHAI users spending at merchants. With inflation-based models, value is more difficult to base.

You can read more on this topic here that i’ve published along with our Head of Research, Nick Platias: https://medium.com/terra-money/the-role-of-transaction-fees-in-network-valuation-and-security-90540c422ff

TieuMai:
Question 4: Please tell us about the CHAI app and its difference from other payment apps @Hwangarang

Daniel Hwang:
Good question. We are really proud of how well the Chai payments app has done!

The CHAI application makes use of the Terra blockchain for transaction and settlement. With many other payment applications, there are still existing hurdles of middle men extracting high fees and long settlement times — 5+ days. CHAI can overcome those hurdles with offering significantly lower transaction fees, incentives to users via discounts and cashback, and provide much shorter settlement times for merchants. This also in turn provides the Terra network with significant real volume.

The CHAI app currently has 1.9 million users and has been integrated into many of the top merchants in Korea including: Korea’s largest bookstore, top e-commerce stores, largest convenience stores, and more. Currently the integrations represent more than $25 billion in gross merchandise volume and will be growing even more in the coming year.

A great place to learn more about CHAI and its metrics can be found at the chaiscan dashboard (https://www.chaiscan.com/) which one of Terra’s validators, DSRV Labs has created.

TieuMai:
Next question will continue to be a question about the application of CHAI

Question 5: How active is CHAI using the Terra blockchain? And what about the correlation with Anchor Protocol regarding the recent Defi Alliance announcement? I would like to easily know what concept it is. @Hwangarang

Daniel Hwang:
The Chai payments application built on Terra has contributed significantly to the Terra ecosystem. Chai has risen to become one of the most popular applications built with blockchain with over 3% of the South Korean population using Chai to pay for goods and services ranging from Korea’s #1 online travel agency, #1 bookstore, #1 gaming publisher, #1 convenience store, the top e-commerce sites, and many more. As of August 2020, Chai currently has over 1.9 million users, an annual run rate of $1 billion, and has shown an average retention rate of over 80% when used with multiple merchants. Further the value of real world value contributing to the network, we have valuation and security benefiting immensely. Please take a read here: https://medium.com/terra-money/the-role-of-transaction-fees-in-network-valuation-and-security-90540c422ff

We have certainly seen great progress in adoption with the Chai payments app. I don’t think there are any other direct consumer applications that have the numbers we’ve seen with Chai both in user counts, transaction volume, and real generated fees. You can find more information on Chai here: chaiscan.com

Continuing the narrative of mass adoption through abstraction, Anchor is a huge next step into the DeFi space. With Anchor we expect to bring a mature savings product whose yields are powered by proof of stake network block rewards. Anchor is a DeFi protocol that specifically leverages the block rewards of every major PoS blockchain to power yields on stablecoin deposits. Anchor aims to become the “gold standard for passive income in blockchain.” It will be offering principal protection, instant withdrawals, and a steady and high APR. Not only will Anchor provide these services, but it can be trivially integrated into platforms with Chai and have its native users easily transition to using it as well. Anchor will unlock both crypto-natives and the rest of the world to using it as a savings product that can be both abstracted away for non-crypto natives (think of it being offered as a savings product offered by a traditional financial institution completely abstracted and as easy as selecting it as a savings product) and a traditional DeFi product that you are all already familiar with. We can truly bridge “CeFi to DeFi”.

The Interchain Asset Association is made up of members of the cosmos, polkadot, Terra, and solana ecosystems

which will serve to guide development of projects like Anchor and other interchain projects

TieuMai:
Thank @Hwangarang , we will come to the last question to end season II and to part III of today’s show.

Question 6: What do you think the role of community is in Terra ecosystem? What’s your plans to keep build positive community and what do you expect support from cryptonation community? @Hwangarang

Daniel Hwang:
The role of the community is extremely important. Not only do members of our community engage with us, but they can contribute in meaningful ways as well. From application usage (like Chai and Anchor), to creating content of their own to help educate and understand, to helping other users and institutions engage with opportunities on Terra, and also to help secure the network itself with staking with validators!

TieuMai:
We’ll move on to Part III with the questions selected from the community participating in our form

@Hwangarang are you ready ?

Daniel Hwang:
Yep!

👉Part 3 : Guest Daniel Hwang, Head of Ecosystem Development of Terra will answer community questions. People can post questions (form (https://forms.gle/Hbkems8L4Pa1chV18) )

TieuMai:
We will come to the first question

Question 1: What are the main advantages and objectives of the Terra based on DeFi? Why does any ordinary user or even any company use the Terra than other platforms?

From @congchuabuongbinh

Daniel Hwang:
Terra is one of the very few if not one of the only projects that has successfully achieved mass adoption

With over 1.9 million users using Chai

DeFi on Terra is an easy and simple way of bridging the gap for normal people to use

Products like Anchor, a simple and robust savings product can trivially be connected for people

from Chai as well as crypto natives

TieuMai:
Thanks for the very good question and very interesting @Hwangarang answer

we will continue with the second question

Question 2: How will you manage your platform if something unexpected happens in the future, especially the hacking issue that causes Terra (LUNA) platform to have some personal data of some of your users ? Is your platform ready for this situation?

From @takataka1

Daniel Hwang:
This is an interesting question. Thank you for asking. “Hacking” in a blockchain setting is delegated to consensus failures. As we are using tendermint, which is a pbft based consensus mechanism, consensus fails when there are more than ⅓ byzantine actors, which means more than ⅓ of total voting power. Since genesis, Terra has not halted or been “hacked”. With regards to other ‘hacks’ this is something that is of the responsibility of the user in our community to practice good operational security and digital hygiene.

TieuMai:
Let’s go on with the 3rd question

Question 3: The total supply of Terra is 997,174,407 LUNA and circulation 385,523,391 LUNA.Does the Terra team have a plan to increase or decrease the supply? And how will that be done to manage the supply of LUNA? And are there any plans to acquire or burn LUNA in 2020?

From @alang_nga

Daniel Hwang:
Terra stablecoins are algorithmically stabilized by Luna as collateral. The increase and decrease in supply of Terra stablecoins and Luna tokens are determined by supply and demand. In short, as demand for Terra stablecoins increase (requiring minting of stablecoins), Luna is burned and vice versa.

In terms of Luna’s value: Unlike most PoS assets, Luna’s staking returns aren’t inflationary but capture value creation in the network. A small fraction of each transaction in the network is captured in the form of transaction fees and is transferred to Luna stakers. As transaction volume increases, the cash flow generated by the transaction fees also increases, making returns to staking and therefore Luna more valuable.

On the other hand, as transaction volume decreases, the cash flow generated by transaction fees decreases, leading to depreciation of Luna’s value. To minimize short-term volatility of staking returns, the stability mechanism adjusts the transaction fees in a counter-cyclical fashion. In the long-run however, Terra’s transaction volume will be the main determinant of Luna’s value.

TieuMai:
The next question will be a question that many investors are interested in

Question 4: What are the main real world use-cases of LUNA in Terra Platform? Also, as a investor, why should i invest in LUNA project as a long term investor?

From @Moment176

Daniel Hwang:
Luna, is the native staking and governance token in Terra. In conjunction with the family of stablecoins in Terra, Luna acts as the stabilizing asset in an algorithmic stabilization mechanism. As demand for Terra stablecoins increases, Luna is burned accordingly. The valuation of Luna is tied to stabilization. More can be read here: https://medium.com/terra-money/the-role-of-transaction-fees-in-network-valuation-and-security-90540c422ff

TieuMai:
Hopefully @Hwangarang answers have met the questions that investors are interested in the project

Go to the final question and conclude part III

Question 5: Adoption is very important, how do you plan on getting Terra adopted by the outside world(people with no blockchain knowledge? What economic value that in the future Terra Luna will bring to the blockChain industry and the practical economy? What will your orientation in the next 5 years be?

From @MrP9x

After finishing the answer from the new visitor we will go to part IV of the question asked at AMA now, everyone preparing their questions. GROUP will be unmute within 1 mins.

Daniel Hwang:
Great question. This is exactly what we’ve seen done with the Chai payments app. We have seen mass adoption through abstraction be successfully achieved with Chai. Chai is a payments app that is abstracted. All you do is download the Chai app (currently in Korea), link your bank account, and you’re good to go. All of the blockchain technology is hidden away. This has allowed Chai to court over 1.9 million users! With over a $1 billion annual run rate and providing over $5 million in total accumulated transaction fees for the Terra network, allowing it to be ranked 3rd just behind Bitcoin and Ethereum, this way of adoption for the masses (the outside world) is extremely important and we’re doing it. Not many other projects have been working on abstraction approaches to bridge the CeFi (traditional, non-blockchain) world with the DeFi (blockchain) world. Terra is building the bridges from CeFi to DeFi and has successfully achieved mass adoption through abstraction.

TieuMai:
Here we are going to part IV of tonight’s program, the group will be open for 1 minute so everyone can ask questions to the guests.

👉Part 4 : All members can ask the guest directly

Question 1:
How easy is it to use CHAI?
What Terra users get from using CHAI?

Daniel Hwang:
It is as easy as downloading the app (in Korea only at the moment), linking your bank account, and then spending!

Question 2: How will the demand for Terra coin(LUNA) will increase in the future? or What steps would you take to increase the demand? May I know how do you plan to attract more business partnerships to your project?

Daniel Hwang:
As more demand for Terra stablecoins exist, Luna burn increases, and value accrual happens.

Question 3: How does LUNA stabilize TERRA? Are they two completely different tokens? Why are both necessary?

Daniel Hwang:

I answered this question a bit earlier, but your specific question has an answer here as well!

Question 4: Many projects are already offering similar solutions with you, what’s your recipe for success and plan to outplay possible competitors and remain relevant in the foreseeable future?

Daniel Hwang:
Not many have achieved what we have. No other project has 1.9 million users with over $2 million in transactions for e-commerce per day and a $1 billion annual run rate.

Question 5: There are lots of Project coming these days & The Main problem with many project is Adoption, Why do you think that Terra will Achieve Mass_Adoption?

Daniel Hwang:
Abstraction. The chai payments app abstracts away everything. Makes it easy for people to start using immediately. Then we can slowly introduce blockchain to them as they get comfortable on our platform.