Terra Blockchain Successfully Completes Highly-Anticipated Upgrade For Cross-Chain InteroperabilitySeptember 30, 2021
Terra Money blockchain ecosystem has completed the Columbus-5 Upgrade, a set of upgrades and integrations that will bring cross-chain interoperability with other cryptocurrency platforms.
Terra kicked off the two-and-a-half-hour irreversible upgrade on Thursday. The enhanced chain is currently stable and ready to use according to the protocol’s developers.
“Columbus-5 is now officially live as the new Terra mainnet! Welcome to the future of Terra.”
Terra aims to create a stable cryptocurrency to enable mass crypto adoption, especially in the e-commerce sector. It is a proof-of Stake protocol that uses the LUNA native token for governance. Terra is also a decentralized payments network powered by the non-collateralized stablecoin UST that Terra stabilizes through an algorithm without using collateral.
Columbus-5 unlocks multiple dimensions for Terra, allowing it to better capture value transfer value across other blockchains built on the Inter-Blockchain Communication (IBC) protocol. It will also establish the foundations for developing a vibrant Terra-based decentralized finance economy (TeFi).
In a nutshell, the price of UST is maintained at a dollar by adjusting its supply. UST trades above the dollar when the demand is high, and the algorithm offsets the price by increasing supply to bring down the UST back to a dollar. When demand for UST is low, the protocol buys back UST to reduce the supply and bring the prices back up.
LUNA plays an important role in the issuance of UST. To mint a new supply of UST, users have to burn LUNA and swap them for UST. Similarly, users have to burn UST to mint LUNA. Network validators also stake LUNA to collect transactions fees on the blockchain.
However, the Colombus-5 upgrade also comes with some changes to Terra’s token economics, the Community Pool and the IBC, and Stargate. Terra users dubbed the LUNAtic community proposed most of the changes through on-chain community votes over the past several months.
These changes will affect the Treasury Module logic, allowing 100% burning of printing costs in LUNA (seigniorage) generated while minting NEW UST. Consequently, the community will not earn seigniorage anymore but this will pave the way for the Ozone upgrade, a claims-based insurance protocol awaiting launch on Terra.
The IBC adoption is also awaiting approval from the LUNAtic community and will be implemented shortly if the proposal passes. Terra is also awaiting new support from Wormhole V2 in the coming weeks that will enable it to import and export assets from Ethereum and Solana.
The protocol is home to several decentralized applications, including Mirror Protocol, Anchor Protocol, CHAI, and Loop Finance.
According to Ryan Watkins, Researcher at Messari, Terra’s stablecoin UST is the fastest growing decentralized stablecoin of 2021 and a hot challenger for Maker DAO’s stablecoin DAO.
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