Terraform Labs

Terraform Labs is a company that has developed a blockchain, called Terra, for Web3 services and products. It was founded in 2018 and has its headquarters in Singapore. The company was founded by Do Kwon and Daniel Shin. It has raised more than $200 million in funds from investment firms such as Lightspeed Venture Partners, Galaxy Digital, and DeFiance Capital. The stated mission of the company is to develop and launch a modern financial system on the blockchain to solve issues with barriers that are blocking the mass adoption of digital currencies.

Much of Terraform Labs' history is centered on its tokens. It has used several tokens since its inception, and they are described below.

TerraUSD, formerly traded as UST, was Terra's blockchain stablecoin, and its development was announced in September 2020. It was an algorithmic stablecoin that had a peg to the United States Dollar (USD), which was ensured through algorithms and game theory using smart contracts. Most stablecoins are backed by cash or other traditional assets, making TerraUSD risky compared to its competitors.

In early 2022, the CEO of Terra Labs announced the launch of Luna Foundation Guard, a nonprofit organization with the mission to protect $UST by building reserves to navigate volatile markets. After the fall of cryptocurrency prices spurred by investors selling their assets due to suspicions of its stability, as well as a downward trend in general global economic conditions, the coin ended up losing almost all of its value in the same crash that also decimated the LUNA coin. TerraUSD is now known as TerraClassicUSD (USTC) and can only be traded on the former Terra blockchain.

LUNA was Terra's native staking token to be used for mining and governance purposes. Its initial coin offering (ICO) was in January 2019, and the token was valued at $0.18 during a seed round and then $0.80 during a private sale. Users could stake it to validators who then recorded and verified transactions on the blockchain in exchange for rewards. The all-time high price for LUNA was in April 2022, when it was valued at nearly $120. By May 2022, the value of the coin was less than $0.10 due to the aforementioned crash.

A chart from Coinbase showing LUNA's rise and fall

LUNA 2.0 is Terraform Labs' second attempt at cryptocurrency and was announced at the end of May 2022. One billion coins were launched via an airdrop to select previous holders of LUNA prior to its demise and other community members. The company partnered with cryptocurrency exchanges Binance and Bybit to distribute the new coins.

The company's initial platform was called Terra and is now known as TerraClassic. It was an open-source blockchain designed to hold an ecosystem of applications and projects. It was built on the Cosmos software development kit (SDK) and used proof-of-stake consensus, along with other technologies such as Mantlemint, Terrain, and Terra Station.

On May 12, 2022, Terra Labs halted the operation of Terra due to the demise of its ecosystem that was brought on by investors dumping their Terra stablecoin, TerraUSD, en masse. The halt meant that holders of Terra assets could not touch or move them and that no new blocks were being generated on the blockchain.

Terra 2.0 was launched on May 28, 2022, in an attempt to revive the Terra ecosystem. It was launched without the algorithmic stablecoin that played a major role in the fall of the original platform. According to the website, Terra 2.0 allows users to build customized applications and organizations or interact with existing ones. Users can earn staking rewards using cryptocurrency, complete transactions for digital art, and be a part of the community that collectively makes decisions regarding the future of the platform. Terra 2.0 uses smart contracts for secure transactions and also offers users access to a development suite of open-source tools, guides, and tutorials so they can learn and build on the platform.

Users can build their own decentralized applications (dApps) on the Terra 2.0 blockchain by setting up Terrain, a tool to create smart contract templates, deploy them on Terra 2.0, and connect them to a front-end app. Users can then download LocalTerra, a tool that has been developed by Terra Labs so that users can test their dApps locally before fully launching them on Terra 2.0.

Terrain also allows users to mint NFTs. Other tools offered include the following:

• Terra.js (to create features such as bots)
• Terra.py (for on-chain analytics)
• Wallet providers
• Finder (to search for blocks and other accounts)
• Faucet (to get tokens sent to a testnet address)
• Terrad (to connect the node daemon and command line to Terra)

Tutorial on how to mint an NFT on Terra

Following the collapse of Terra Form Labs' coins, both of the founders of the company have faced legal issues. Prosecutors in Do Kwon's native South Korea issued a warrant for his arrest in September 2022, and he was added to Interpol's Red Notice list, which encourages other authorities to locate and arrest him.

Terra Form Labs is being sued by retail investors, and a class action lawsuit has been filed in Singapore by more than 300 investors. The lawsuits are against the company itself, as well as Kwon and Shin.

It has also been reported that South Korean authorities have summoned all former employees of Terra Form Labs to investigate the theory that the company intentionally manipulated coin prices and discern whether proper procedures were followed for exchanges that took place in South Korea.