TerraUSD (UST) is an algorithmic, seigniorage-based stablecoin issued by Terraform Labs (TFL). UST is one of the fastest growing algorithmically stablecoins to-date. Its market capitalization has grown to ~$270 million (TerraUSD price, UST price index, chart, and info | CoinGecko) since its inception on October 1.
TFL currently uses Shuttle (GitHub - terra-project/shuttle) to bring Terra assets, including UST, to Ethereum. At the time of this writing, the supply of erc-20 UST is roughly $70 million.
Additional details on UST can be found here:
- Blog: Announcing TerraUSD (UST)— the Interchain Stablecoin | by Do Kwon | Terra Money | Medium
- Website: https://terra.money
- Docs: Smart Contracts | Terra Docs
- ERC20 address: https://etherscan.io/token/0xa47c8bf37f92aBed4A126BDA807A7b7498661acD
Proposed reserve assets and weights
What are the points of centralization/risk?
Our Ethereum bridge, Shuttle, is an EOA with the keys being held by Terraform Labs. We are currently working to migrate this control to a multisig operated by third party validators on Wormhole.
Most stablecoins have centralized issuers that guarantee value (e.g. USDT, USDC), and we believe sufficient time has passed since the inception of our assets for the community to evaluate risks (1+ years). There is also significantly less risk for an EOA bridge with Terraform Labs as the custodian vs. a centralized fiat-backed stablecoin platform which has additional risk such as regulatory seizure, non-transparency of reserve,etc.
What are the financial risks?
As with any stablecoin, the main risk to liquidity providers is the coin permanently losing its peg. Terra’s first stablecoin, KRT, has been operational for >18 months without breaking peg: https://www.coingecko.com/en/coins/terra-krw
UST has maintained its peg despite the significant increase in demand over the last month with the launch of Mirror Protocol. We believe this is a testament to the robustness of our stablecoins and to the maturity of our ecosystem.
How will this pool attract TVL?
The increasing number of use cases for UST (Mirror Protocol in Dec 2020, Anchor Protocol in Q1 2021), has and will continue to increase the demand for UST. Increasing demand for UST makes it attractive for UST liquidity providers in the Shell ecosystem.
What is the project’s vision and how does Shell fit into that?
The goal of Terraform Labs is to make our stablecoins more useful. We believe this aligns well with Shell’s vision of creating and fostering a more healthy stablecoin ecosystem, consisting of a basket of diverse stablecoin assets. Is it ironic that the vast majority of stablecoin volume comes from a few, centralized stablecoin projects.
Shell provides an important infrastructure layer which increases stablecoin diversity, which we believe will ultimately increase the robustness of the entire crypto ecosystem.