Terra presents a proposal to increase UST liquidity across various Ethereum DeFi protocols, in order to make UST the market's benchmark stablecoin.
A new proposal from Terra, the protocol that develops the LUNA cryptocurrency and the algorithmic stablecoins UST, MNT and KRT, was revealed this Tuesday through the official Terra Twitter account.
The post shared by Terra developers proposes launching a liquidity mining program through decentralized finance protocols (DeFi) as CurveFinance, ConvexFinance, olympusDAO and others, to strategically increase the liquidity of UST, in order to make it the reference stablecoin of the crypto market. Terra's proposal seeks to position UST above Tether (USDT) y USD Coin (USDC), both stablecoins that dominate the industry by capitalization.
Terra wants to expand the dominance of its algorithmic stablecoin UST through liquidity mining incentives. The creator of the proposal, who goes by the pseudonym “Ezaan,” wants to develop a new liquidity mining program. Liquidity mining of UST for 6 months within DeFi protocols built on Ethereum, such as Curve Finance, OlympusDAO, Rari Fuse Pools, Convex Finance, Tokemak, among others. Curve Finance is currently the protocol with the highest liquidity within the decentralized ecosystem in general.
Terra's proposal to grow UST liquidity, and position the stablecoin in Ethereum and the crypto market, also includes voting incentive programs and Tokemak + Votemak incentives. Interest and returns generated through UST liquidity mining will be paid in LUNA, Ezaan reported in its proposal of governance.
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Terra’s UST, a rival for USDT and USDC?
The algorithmic stablecoins developed by Terra, linked to different fiat currencies such as the US dollar, the Korean won and the Mongolian tugrik, seek to provide efficient alternatives that allow the widespread use of blockchain technology and cryptocurrencies in global payments, in a stable, transparent and decentralized manner.
Terra aims to ensure stablecoin price stability without abandoning the core principles that Bitcoin, the world’s first and most important cryptocurrency, has established since its inception. Thus, in the face of the numerous issues of opacity and non-compliance faced by USDT issuer Tether Limited and the regulatory scrutiny faced by USDC issuer Circle, Terra’s UST stablecoin has a lot of potential and room to grow.
UST is currently the 5th stablecoin in the ecosystem, with a market capitalization of 7.600 million. However, through its plan, Terra will be able to make “UST the benchmark cross-chain stablecoin.”
Proposal vs Community
So far, the Terra crypto community is debating the proposal put forward by Ezaan to increase UST liquidity. Some members of the community agree that its implementation could bring great benefits for the growth and consolidation of UST and also for its users, by reducing slippage or slippage which occurs when you exchange UST for other digital assets.
On the other hand, there are those who point out that the benefits of implementing liquidity mining and voting incentives to grow UST on Ethereum are not entirely clear, as well as how to continue incentivizing liquidity after the 6 months indicated in the proposal.
Ethereum's largest DeFis
The proposal highlights that Curve Finance and Convex Finance protocols are two of the largest in existence on Ethereum currently.
Curve Finance, developed in the blockchain Curve Finance, built on ETH and deployed on multiple highly scalable blockchains, is known as the DEX of stablecoins. Curve allows users to trade their stablecoins within an intuitive, highly secure, and efficient platform. Additionally, it also features Uniswap-style liquidity pools, where users can earn interest by depositing their stablecoins as liquidity providers (LPs). Currently, the liquidity deposited within Curve Finance exceeds $21.000 billion.
On the other hand, Convex Finance is the third largest DeFi protocol on Ethereum, with a total liquidity of over $15.000 billion.
Continue reading: LUNA, Terra's governance token, is now available on Bit2Me Wallet
