Most of the public-facing publications authored by the Terra team have revolved around thought leadership on the unique stability mechanism underpinning the Terra Protocol while information about Terra’s business operations have relied on third party media coverage on a case-by-case basis. This post hopes to rectify this state of affairs, and provide the community with a more granular look at the thought processes powering Terra’s business development operations while serving as a source of the most up-to-date information regarding our efforts thus far.
As a stablecoin that is designed as a transactional currency focused on usability and decentralization, Terra’s business success will be determined as a function of the transaction volume it processes. Our thesis is that by capturing the eCommerce payments vertical and providing a key piece of infrastructure for the space, Terra will be able to position itself as a major contender to legacy payments giants such as Alipay and PayPal. In the long-run, there is infinite design space for a stablecoin that reaches a critical mass of users and market cap, with multiple applications to potentially reshape the financial sector.
So this post is our opportunity to conduct a reality check. Are we on track to fulfill our mission? Is the State of the Terra Alliance strong?
Capturing eCommerce
The explosive growth of payments giants Alipay and Paypal was catalyzed by piggybacking on the success of Taobao and e-bay — key players in the e-commerce space. In creating a new payments network, e-commerce has several characteristics — most notably scale, digital, and growth potential — that make integrations in this market the logical first step.
The problem, however, is to craft an incentive structure that jumpstarts the process both from the perspective of e-commerce platforms and their . As a protocol that adjusts money supply to ensure price stability of its digital currency, this is where Terra has a comparative advantage over other payment service contenders.
As the transaction volume captured by Terra increases, inflation in its internal cryptoeconomics leads to the issuance of new money supply to stabilize prices. How this new money supply is spent can be programmatically determined by the Terra Protocol, and in the beginning phases of , the majority of seigniorage will be used to fund steep discounts for using Terra to pay for goods and services on our e-commerce partner platforms.
Due to the incentive mechanisms powered by seigniorage discounts outlined above, Terra has already onboarded multiple strategic e-commerce partners in Korea and the Southeast Asian region with a combined Gross Merchandise Value (GMV) of $25 billion and a customer base of 45 million users.
But sheer transaction volume alone does not guarantee fertile grounds for the growth of a next generation payments network. That’s why Terra has made it a point to develop business relationships with key players in each specific industry vertical within eCommerce and O2O such as general commerce, mobility/transportation, delivery, and fashion. By further pushing this thesis, Terra’s goal is to cover all verticals in a customer’s spending cycle in any given day to truly become a transactional currency.
Platforms such as TMON, Yanolja, Megabox, Musinsa — each leaders in their respective general commerce, leisure, entertainment, and fashion verticals — have joined the Terra Alliance with the goal of reforming the payments business through the , and we remain grateful for their trust in us. I would also like to call out to any other platform players who are interested in joining us in our journey to power the innovation of money.
Capturing Crypto
As a project, Terra seeks to capture the vertical in tandem with efforts to integrate Terra as the payment method of choice in the e-commerce space. The use-cases for a stablecoin in the space are manifold, leading enthusiasts to dub the stablecoin concept the “holy grail” of . Rather than relying on the logic that something useful will get used, we delineate some of the methods by which we are structuring cooperative frameworks with crypto projects.
Despite the market size of , various obstacles such as low transactions per second (TPS), high platform service costs, and price volatility serve as limiting factors in providing enterprise-grade services — hindering technology’s potential to innovate business processes. These limitations have led existing mostly useful solely as speculative instruments.
By solving the problem of price volatility in particular, we believe that Terra can facilitate the creation of dApp services on multiple platforms that are more suitable for mass . The decentralized economy, in essence, is a marketplace where willing participants provide various forms of resources — creative content (Steem), computing power (Golem), storage space (Storj/Filecoin), etc. — in return for payments in the form of utility . Yet, in order for this marketplace to function, price stability is key.
Let’s consider a simple hypothetical music player dApp where Jane is a contributor and John is a consumer.
- Jane is a musician who posts her original songs on the dApp where she receives 10 tokens per download.
- John likes Jane’s music and pays 10 tokens to download her content.
If the prices of the were stable, this would be the end of the transaction.
Jane would be free to use the in any way that she wanted. She could hold onto them for further use on the platform, change them at bulk for fiat currency at the end of the month to pay her bills, or send them to a friend who wants to buy a song on the platform.
John would finish the transaction satisfied that he paid a fair price for the song without having to worry about the possibility of the “song” being worth thousands of dollars in the future.
However, because the powering the dApp is not price-stable, Jane and John are faced with issues that severely degrade service usability.
Published at Wed, 27 Feb 2019 06:50:07 +0000
