Terra’s swift collapse triggered a crypto market sell-off, billions in lost fortunes and a rumored class-action lawsuit.
But now, Terra’s most valuable asset – the loyalty of their developers – is being challenged.
With the launch of Terra 2.0, projects must decide whether or not they will stay loyal to the Terra ecosystem or choose another path. Competing blockchains are offering up major perks for them to develop on greener pastures. Will they stay or will they go?
As Terra’s native LUNA token lost 99% of its value, other Terra project tokens got swept up in the sell-off, wiping nearly $40 billion in value from the once-robust Terra ecosystem. Indeed, Terra was more than UST.
These developers are also facing poaching efforts from Terra’s competitors, with some blockchains even launching eight-figure funds to help sweeten the deal.
With his current project now “on pause,” Somani says he is facing uncertain next steps.
“A lot of ecosystems have reached out, including Avalanche, Secret Network and Osmosis,” Somani told CoinDesk.
Avalanche is an EVM-compatible blockchain that has previously collaborated with Terra. Secret Network, a privacy-focused blockchain, and Osmosis, with its focus on DeFi, are also based on Cosmos technology.
Somani said these projects typically send him a link to a grant application, along with a handful of ideas of what the network finds attractive. He has also received “a handful” of interview requests from various protocols.
“I haven’t committed to anything at this point,” Somani said.
“There aren’t many engineers who have been deep enough in DeFi to see a project scale to that level,” Eskow told CoinDesk.
“The engineers at Terra built a strong product,” said Eskow. “The failed strategy is not a reflection of their work, and there are many projects with less baggage that would hire them in a second.”
In short, the failure of a prominent algorithmic stablecoin also sunk the fortunes of other projects that had nothing to do with UST.
For the crypto industry, a chronic shortage of developers has left blockchain projects starving for quality talent.
“A strength of Terra was DeFi,” said Sei’s Edlebeck. “It wasn’t just Anchor. Terra had borrowing and lending, it had derivatives, it had a money market.”
Edlebeck says he would like to see a more “robust” ecosystem on Cosmos, adding that Sei Protocol has started working with an ex-Terra team to build out a perpetuals product.
“I do think that Cosmos and its design architecture is poised to see a lot of new activity take place,” said Edlebeck. Notably, Terra itself is built on Cosmos technology.
In addition to engineers, crypto recruiter Eskow says he’s also looking to poach talent from funds that suffered big losses from Terra, hoping that embattled employees choose to jump ship.
Kadena, Polygon launch Terra support funds
To further entice talent, blockchains projects such as Kadena and Polygon both announced this week that they would dedicate millions in funding to assist projects affected by the Terra turmoil – so long as the project agrees to build on their respective chains.
Kadena, a layer 1 blockchain founded in 2016, announced a $10 million Terra relief fund Thursday in an attempt to court projects into its ecosystem.
Melpignano stressed that the funds will go beyond helping just Terra developers, even projects that, for example, lost runway capital by depositing funds into Anchor would qualify for assistance.
“This is a defining moment for the blockchain industry,” Melpignano told CoinDesk. “It goes beyond Terra.”
“When we saw the unfortunate collapse of Terra, it left a lot of developers without a home,” said Polygon Studios CEO Ryan Watt. “Terra’s failure shouldn’t punish [the decentralized applications] built on it.”
Watt declined to comment on the specific size of the fund, in an effort to “ensure that developers aren’t feeling rushed to decide and give off the impression that there’s only a finite amount of money available.”
Additionally, he advised project teams to build where users are and to build to be EVM-compatible.
“The important emphasis here is that we are putting millions of dollars aside, whatever it may take, to properly ensure developers have a home to move to and continue building in Web 3,” Watt told CoinDesk.
However, representatives of a Terra project who spoke with CoinDesk on the condition of anonymity said that supporting the new chain was not exactly the same as committing to build on Terra.
“Terraform Labs was extremely good to us as developers, so we want to support them in launching the fork, but we can’t commit to building yet,” a Terra developer told CoinDesk. “The thinking is, there’s not any downside with aligning with Terra until things with the new chain become clearer.”
Sei Protocol’s Edlebeck says he’s been in close communications with several top Terra projects over the past few weeks, including the team from Delphi Labs, a heavy investor in the Terra ecosystem.
“Project founders are really exploring other options, even more than I was anticipating,” said Edlebeck. “Terra 2.0 has too much up in the air, the path forward is being questioned.”
Devs keep on BUIDLing
Despite the uncertainty over where to build next, Kadena’s Melpignano says he hopes developers don’t end up leaving the space altogether.
Web 3 talent retention was another motivating factor behind Kadena’s $10 million fund, Melpignano admits.
“Now is the best time to build,” said Melpignano. “This is when the category-defining apps will be born.”
Even for those burned by Terra’s downfall, crypto – with all its highs and lows – appears to have left a mark on the talent it attracts.
“A bunch of hedge funds reached out to me too, asking if I wanted to go back to traditional finance,” Somani, the former Citadel staffer, told CoinDesk. “But I’m all-in on crypto.”
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