LocalTerra: P2P decentralized Exchange for Terra

Terra’s ecosystem is very rich and gives many options to its users, lately with Anchor being launched, it can give access to stable interest rates never seen by many in the world.

One of the major barriers to entry in Terra’s ecosystem is the difficulty to acquire UST, we want to make it easy for people to get UST anywhere in the globe.

LocalTerra will be a P2P, decentralized exchange of UST (and any other Terra assets) for fiat currencies.

P2P exchanges such as Localbitcoins and LocalCryptos are the main on-ramp to crypto in countries where access to crypto-fiat exchanges are limited. These services have 4M and 500k monthly visits, countries like Venezuela, Colombia and Pakistan are among the top countries by traffic.
(Source: Localbitcoins.com Traffic, Ranking & Marketing Analytics | SimilarWeb, Localcryptos.com Traffic, Ranking & Marketing Analytics | SimilarWeb)

Deliverables

WebApp: Responsive ReactJS web app that will talk to the smart contracts using the Terra.JS library and the backend API.

API: An API server that will process chain data and serve it to the webapp, it’ll also facilitate communication between buyers, sellers and arbiters.

CosmWasm Smart Contracts in Rust:

All the backend of the service will live under LocalTerra’s smart contracts, every offer creation, escrow and order execution will live on-chain.

Utility Token

A new token will be created and used for governance and to incentivize participants. Important parameters of the system, (fee rates, arbitration quorum size, etc) will be managed through governance votes performed by token holders. 100% of trading fees will be rewarded to token holders (stakers), they will also receive arbitration fees when participating in potential dispute resolutions. No more than 33% of the total supply will be distributed to the founding team, the remaining tokens will be distributed to Luna holders (airdrop), liquidity providers on Terraswap and early users of the platform.

Simplified System Design

Timeline

8 Months of Development, we plan to deliver it to TestNet in 5 months and have 3 months of testing and smart contract auditing.

Team

Gabriel Brettas - UI/UX & Front-End Development

Gabriel has been building User Experiences and Interfaces for 15 years.

Worked inside some of the largest companies in Brazil like Itaú, Globo.com and Sky. Now works at Mercado Livre, the largest online commerce and payments ecosystem in Latin America.

Samuel Barbosa - Backend & Smart Contracts Development

Samuel has 11 years of experience writing software from websites to mobile apps for millions of users and clients like Globo (biggest media company in Brazil) and Disney. Working with blockchain since early 2018.

Price:

96k UST - Development:
2 Full-time team members for 8 months at a 6k UST/mo pay rate.

10k UST - Domain, Hosting 1st year and Smart Contract audit.
Domain and hosting is pretty cheap, most of this will be used in the Smart Contract audit.

Total: 106k UST

Thanks for reading! We really appreciate your feedback.

7 Likes

Sam - this looks great. What advantages do you think exists for building this from scratch instead of getting UST added to existing vendors with distribution like localCryptos?

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Do - thanks for your question!

I honestly think that both should be pursued. Adding it on LocalCryptos would bring a lot of value since it’ll expose Terra to their existing users, but I have no control over that and all I can do on this front is to send them an email and cross my fingers.

LocalTerra will be a Terra centric service, that means that every Terra asset will be available for trading at launch, making it really easy for users to enter Terra’s ecosystem without doing multiple hops from their fiat to the desired Terra asset.

Mirror and Anchor solves real problems of many right now, I see Anchor as a dream for many livinig in places of the world right now in which their countries can’t even manage to provide a stable fiat currency, let alone provide access to 20% interest on one of the strongest currencies on earth or allow them to invest in stocks, and such countries are the main markets for P2P services like this.

I just don’t want to solely wait on LocalCryptos to eventually fulfill this dream if I can do something to achieve it myself, right now.

2 Likes

Hey @Samuel_Barbosa, I run a crypto startup in Pakistan. The biggest challenge we face is this initial onboard and the fiat conversion. Currently, p2p exchanges are the only way to get access. There is usually a huge premium, sometimes over $10000 on BTC. How can this solve that?

@saad, thanks for your question.

I face a different side of the same issue while selling crypto in LocalCryptos here in Colombia, usually these premiums or discounts are hard to solve without the ability to arbitrage with foreign currencies. Usually this happens in countries where it’s hard to move money in and out.

Despite the premium in Pakistan or discount in Colombia, p2p exchanges are very popular in these countries. So even if this is a problem that end user faces, it doesn’t stop crypto from being adopted in such places.

The main selling point will be the many possibilities inside Terra’s ecosystem and hopefully these benefits will outweight such premiums or discounts.

Thank you for getting back to me. I respectfully disagree. That is the number one thing preventing adoption in Pakistan at least. People are not using p2p unless it is the very last option. Most people get them through friends or acquaintances abroad and there are also many horror stories. I would love to see a way to address that by enforcement through the protocol and using incentives via the governance token.

@saad Pakistan is the number 2 country in Localcryptos by traffic according to Similarweb. It’s definitely being used a lot there. Nevertheless, we’re open to ideas to try and tackle this problem.

Thank you.

I am aware of that statistic. As someone operating in that market, this is my feedback. More governance token rewards can be given to buyers or sellers depending on demand (like uber surge), and spread between the price can be restricted.

1 Like

Hi to both of you. I am very interested in this proposal and I do have a lot of experience dealing with these P2P decentralized exchanges. There’s no way to escape Premiums/Discounts as both demand in markets, surplus of crypto and tax implications will generate those price dynamics between countries. However, this is not a bad thing at all. Why? Any P2P worldwide market will generate arbitrage opportunities and there will always be people trying to get ahead by doing this across countries. People buying in Colombia (no firm regulation, no tax, surplus of supply leads to discounted prices) will sell in Russia (high premium). While this is not IDEAL, this will drive demand for UST. We need escrows, we need secure claim processes, we need location locking (or FIAT to Terra Stable, say TCOP for Colombia, on boarding to avoid international arbitrage from happening on scale). As a finishing touch, I’d like to link you to a better resource to see the volume of P2P trades in localbitcoin.com and paxful.com (a place such as paxful made around Terra would be INSANE as it will give it tons of use cases in seconds). Check this website: Coin Dance | Bitcoin Volume Charts. You’ll get accurate data. Main targets should be the countries with political struggles and high trading volume over P2P.

4 Likes

Hey @Samuel_Barbosa, super interesting idea! Would love to discuss how we can support. Feel free to ping me on TG @jeffreykuan

2 Likes

P2P stable/fiat is an excellent idea, but it is more important to get terra stable coins listed in more crypto exchanges

Thanks for all the questions and support! The proposal was sent to the network and is in the Deposit stage.

https://station.terra.money/proposal/67

1 Like

I’m not clear on why this would require a separate governance token, if Paxful can do it for Bitcoin/ETH with a website? At its most simplistic construction, it could simply be done with a multi-sig escrow contract with an arbitration option in the case of a conflict?

Which is also necessary to be able to trust purchases with UST or other stablecoins online.

@stevesirag Paxful is a centralized p2p exchange.

The governance token will accrue all the fees generated by trades and token holders will be the ones doing the arbitration when necessary. The main idea is to build it in a way that even if our servers are shut down the service can be quickly spun up again by anyone. We want to make it unstoppable.

1 Like

Would it be possible to use $LUNA in this solution since it is already a governance token? Arbitrators could be required to stake 100 $LUNA or some minimum, and be subject to slashing if they are found to misbehave? My concern about adding another governance token is that it seems to be creating a permanent solution to what is a localized and shifting problem, and if the governance token doesn’t hold value in the general crypto market, the value of the arbitration also dips. I find the LocalCryptos description of why they didn’t create a token interesting: Why We Won't Have An ICO - LocalCryptos Blog

1 Like

@stevesirag To be able to use $Luna as the governance token of our system it would need to be more profitable to stake Luna in our system than elsewhere, this would be extremely hard at least at the beginning of the service. Also, it would not be cost effective for us since we wouldn’t be able to incentivize participation in the system unless we buy a bunch of Luna and distribute it to the participants, which is not cost effective.

We won’t have a token sale, apart from the 33% of tokens that will be distributed to our team, everything else will be airdropped to $Luna stakers (most part of it) and used as incentive to boostrap liquidity in the platform.

Arbitration fees will be paid upfront in UST and refunded if it’s not needed, so the value of the arbitration is not tied to the value that the token will have in the open market.

In LocalCryptos 100% of the fees goes to the creators and if their service gets shut down they are the only ones who can bring it back up. We plan to make LocalTerra resilient and even if others want to serve another front-end to the service, that will also be possible, since 100% of trading fees will be distributed to token holders, we won’t be the only ones interested in keeping LocalTerra afloat.

Hey @Samuel_Barbosa, I just deposited my support. Thank you for addressing the questions. Looking forward to what the team comes up with!

1 Like

I still think it is not unreasonable to try to use the governance token to help reduce the spread in prices. Luna is all about stable(ity) and promoting mainstream adoption. Operation in a market with a need for this, I think about P2P solutions often. We look forward to integrating this into our app that focuses on the Pakistani market but ONLY if it solves that issue. Otherwise, this is just another p2p solution and the governance coin has no purpose imho.

2 Likes

@saad thank you very much for your support!

1 Like