Bringing Terra stablecoins to Solana

Disclaimer: I am a member of the TFL team.

Background:

A key growth metric for Terra’s ecosystem is the market cap of our stablecoins. Increased stablecoin utility and distribution makes our stablecoins less fragile, our ecosystem stronger, and ultimately accrues value back to LUNA.

The ecosystem on the Terra blockchain is growing rapidly. This is one piece of the puzzle.
The other piece is growing Terra stablecoin utility outwards onto other Layer 1’s. We’ve been waiting for Wormhole to go live so that we can port our assets over to Solana, but given the budding ecosystem, we don’t want $UST to be left behind.

Proposal:

We are in contact with the Mercurial Finance team (https://mercurial.finance/), which is building a Curve-like product on Solana, to add $UST as a base asset in the 3pool with USDT and USDC (replacing DAI’s role on Curve). This will be done by porting over UST from the ETH → SOL Wormhole bridge.

We’ve gotten to know the Mercurial team over the last few months, and we believe strongly in the team and their vision. They’ve raised over $10M, and have broad institutional and retail support:


We believe that Mercurial will spearhead stablecoin growth in the Solana ecosystem, and we want to join them on this journey.

Here are the details:

  • The Mercurial team would like to launch a 8-week pilot for UST in the 3pool.
  • We are requesting $167,000 worth of LUNA (roughly 24,000 LUNA at current prices) from the community pool to fund liquidity mining (LM) incentives for the pilot.
  • All incentives provided by TFL will be matched by the Mercurial team.
  • To provide competitive incentives, we are targeting a 20% yield on a $10M base pool, split 50/50 between Mercurial and Terra.
  • This equates to $1m in annualized incentives, or $83,333/month, or $166,666 for 8 weeks.
  • After the pilot period is over, we will survey the community for feedback. If positive, we will crystalize a longer-term relationship.
  • We will vote on LUNA LM distributions quarterly to give us flexibility to adjust rewards based on factors like pool size, user demand, etc.

Feedback welcome!

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Where do we vote? Terrastation?

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Wanted to start a discussion first. If sentiment is positive, I"ll initiate a governance vote on station.

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This sounds like an intelligent strategy. It makes sense to do a trial run before committing because I imagine there will be competitors to the Mercurial project; however, I trust in the TFL teams discretion.

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A resounding YES on my side. Terra community must acknowledge and partner with strong DeFi players. Other than Ethereum, Cosmos and Thorchain ecosystems (which I am aware of the progress we are doing) Solana will also be a cornerstone of the cryptospace in the future.

Onwards!

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A ‘Yes’ vote from me. This seems like a risk averse strategy especially given the trial period. There is a lot to gain, not much to lose. UST needs to grow as many legs as possible to be in as many projects as possible to ensure future stability.

My only concern (that doesn’t really have much to do with this proposal) is with UST adoption growing too fast. Growth is a great thing, but too much growth can be dangerous. There will eventually be a mass exodus from other stable coins so as long as the TFL team thinks the algorithm will hold up to the volatility as well as new project growth then I am all for it.

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Will this coincide with the launch of solAnchor? Would be nice to see if people take anchor loans on their sol then swap using tripool for a stable to use for trading. Otherwise im not sure if you will see many swaps to UST if there isnt a utility to come with it.

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Sounds good will vote yes

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Hi everyone, this is Ming from Mercurial!

Thanks Jeff for the awesome proposal and it’s great to be connected here with everyone here. We have been following Terra for a while now, given that it is probably one of the most important stablecoin projects in the space.

As mentioned in the proposal, we are currently building a Curve-like stable swap system on Solana, with important features like dynamic fees and dynamic capital allocations coming later this year. You can try out the service now at mercurial.finance, or read about the broader goals in our litepaper.

We are looking to collaborate with Terra to work on co-liquidity mining, education and adoption for UST. This pilot should allow us to get UST off to a headstart in the early Solana ecosystem, while giving the community sufficient time to evaluate this partnership and choose to extend or not.

In this post, we would like to provide the Terra community with more context about our team, current project progression, and goals for the proposed collaboration.

Team and Investors

We are a team of experienced operators in the technology and blockchain, having worked on a wide range of crypto projects from very early days, including Blockfolio, Instadapp, Kyber, WBTC, Handshake and others.

Our founding developers include Siong, who is the founding engineer of Envoy, Andrew, one of the founding engineers at Kyber, and Pierre Arrowana, one of the OG developers in Solana. Loi, the founder of Kyber, is also a founding adviser of Mercurial.

Our investors include Delphi Digital (who helped to foster this collaboration), DeFi Alliance, Defiance Capital, Alameda Research, and Sino Capital.

Current Project Status

We’ve recently launched Solana’s first multi-token stable pool in Mainnet Beta. Using our pool, we now offer the best rates for swaps for stables on Solana across the stable assets currently on Solana.

Collaboration

We will work on the following:

  1. Liquidity: Driving liquidity and value of UST on Solana
  2. Utility: Increasing the utility of UST on Solana by encouraging the usage of UST in trading, lending platforms, etc.
  3. Education/Awareness: One of the things we learnt is how important it is for the community to understand the team and mechanics of a stablecoin. We will work closely with the Terra team to drive this forward, including new marketing and awareness campaigns.

Why Now, Why Pilot, Why Mercurial?

We expect the Solana Defi ecosystem to grow dramatically in the next few months, with a number of lending platforms and their tokens coming live in the near future. This is a good time to start driving awareness, and we think a co-LM farm will do a lot of that.

We believe that an 8 week pilot will be a good period of time for the community to evaluate if the liquidity mining is worth the investment, and if we are the right partners to work together with. In any case, having more targeted stakeholders of LUNA in the Solana ecosystem will also help the growth of UST.

To be clear, just like most other projects in Solana, we are still relatively early. That said, we are hard workers, and we focus on building really good tech/user experience. But most importantly, we will cooperate closely with the Terra team/community to drive solid liquidity, and great understanding of UST to the Solana community.

Thank you, and hope this gets to a vote!

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Great point! Utility and education has to go hand in hand with this, in fact I think it will be a great virtuous loop. Probably could also drive awareness of Solanchor and related projects when the pool gets announced.

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Yes sounds awesome

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What is the most widely used stable coin on Solana currently?

What are some potential reasons the pilot would fail?

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Looks like a great idea! I am for this

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Seems like a proposal with a lot of asymmetrical risk, the returns of a successful partnership far outweighs the loss in case of a failure. Plus, the team seems to have support from both Terra Labs and Delphi Digital so it seems a no brainer application of capital.

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This certainly sounds like a prudent partnership for enabling UST growth. I like the prospect for Terra and think this may be a prime opportunity.

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Ok thanks Jeff

Just going off of Raydium, it is USDC followed by USDT.
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The wormhole bridge could be a cause of failure. If that bridge breaks down, the UST on Solana loses access to maintain its peg by mint/burning luna.

Bases on what I’m reading I would agree with this initiative; thank you for asking, very kind.

My only question would be regarding the nature of the relationship with coinbase, and if there is one, how extensive is it?

Excellent proposal, a classic ‘win-win’ situation with the bonus of ‘early adopter’.
This is all going to be part of financial history of early 21st century. What a time to be alive.

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Yes from me. Only question is: given this report from April of 2020, why isn’t $UST already on Solana months ago?