‘Don’t lose hope’ TraderJoe Co-Founder on Terra’s eco-system collapse

‘Don’t lose hope’ TraderJoe Co-Founder on Terra’s eco-system collapse
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Co-Founder of TraderJoe, an Automated Market Marker on Avalanche faced huge losses from the cryptocurrency crash of 2018 led by the ICO market. He lost most of his earnings and was on course to switch his profession from a doctor to a crypto builder. 

“I was a man on a mission” tweeted crypto-fish, the Co-Founder of TraderJoe. “Even in my master's program, I was a mature student. There was a lot of catching up to do”

At the age of 30, he enrolled in universities to complete his courses in computer science and learnt Advanced algorithms, advanced ML, and functional programming. He then went on to launch TraderJoe in 2021 with a Total Value Locked at about $1.5 Billion to date making it the largest DeFi protocol on the Avalanche blockchain.

Terra eco-system collapse

LUNA, the native stablecoin of the Terra eco-system shed 100% of its value over the past week and currently trades at $0.000272 from an all-time high of $119.18 recorded last month according to data from CoinMarketCap.

In 2018, Daniel Shin and Do Kwon founded Terra, with the aim of providing growth potential like that of other cryptocurrencies while adding stability like that of stable coins. Aspiring to become the currency of decentralized, stable money in fiat and blockchain economies, Terra is pegged to USD, KRW, MNT and other fiat currencies.

UST is the native algorithmic stablecoin of the Terra ecosystem. Unlike collateralized stablecoin, algorithmic stablecoin is governed by smart contracts. LUNA acts as a cushion to keep UST at its dollar peg through a mint-and-burn mechanism. Users can always swap $1 worth of LUNA for UST and vice-versa.

Last week, the dollar peg of UST fell rapidly, allowing investors to swap UST for $1 worth of LUNA. Then they can sell the newly minted LUNA in the open market to pocket the difference as profits.

“The system burns a portion of the Luna it has earned during expansions until Luna supply has reached its 1 billion equilibrium issuance. Therefore, Luna can have steady demand as a token with pro-rata rights to Terra mining over the long term,” said Do Kwon on Terra’s whitepaper.

But it's unclear how the ecosystem responds to a supply of 1 billion, which happened on 12 May 2022 and the supply increased tremendously to 6 Trillion recorded on 14th May 2022 according to data from Messari

This resulted in not just instability but a complete value erosion of LUNA. The Terra ecosystem tokens including LUNA and UST are now defunct and delisted from all of the major exchanges including Binance.

On its slide, Terra took away the crypto wealth of hundreds of investors.