Proposal: Add support for TerraUSD (UST)

Hi Aave community, Jeff from the Terra team here. We would like to submit a proposal to onboard UST.

References:

Summary

TerraUSD (UST) is an algorithmic, seigniorage-based stablecoin issued by Terraform Labs (TFL). Its market capitalization has grown to $1.8B (​https://www.coingecko.com/en/coins/terra-usd​) since its inception on October 1. UST is designed such that each UST can be redeemed for $1 of LUNA, and vice versa. This has kept the price close to the peg, which is essential for a stablecoin.

Motivation

The Terra community is quite active, and growing very quickly. Because our strategy is multi-chain, we are looking for borrowing/lending markets for UST on all the chains where UST is supported. Ethereum is naturally the top destination for assets coming from the Terra chain.

The asset is supported by major dApps including Curve, Uniswap, Sushi onsen, Harvest, etc. UST can also be deposited into Mirror Protocol mAsset pools on Uniswap, and is depositable into Anchor via EthAnchor (EthAnchor - Anchor Protocol). We believe there will be sufficient demand for borrowing/lending given the variety of existing use cases.

Specifications

  1. What is the link between the author of the AIP and the Asset?

I am a member of the Terraform Labs team.

  1. Provide a brief high-level overview of the project and the token

Terra is the team behind Anchor Protocol and Mirror Protocol. UST has been live since October 2020, and has held peg well. There are 6,270 unique holders of erc20-UST.

Curve volume:

  1. Explain positioning of token in the AAVE ecosystem. Why would it be a good borrow or collateral asset?

As a stablecoin, it’s maintained its peg, particularly over periods of market volatility. And as mentioned above, we believe there will be sufficient borrowing/lending demand for UST given there are a variety of existing use cases.

  1. Provide a brief history of the project and the different components: DAO (is it live?), products (are the live?). How did it overcome some of the challenges it faced?

Terra is the team behind Anchor Protocol and Mirror Protocol. Mirror has $2B TVL, and does ~$100M in daily volume. Anchor launched 5 weeks ago and has ~$700M TVL. Our oldest stablecoin is KRT, which was launched in 2018, and has been able to maintain peg for the last 3 years.

  1. How is the asset currently used?

UST can be used on most of the major dApps - including Curve, Uniswap, Harvest, Sushi, etc. as well as on Terra applications such as on Mirror mAsset pools and ethAnchor.

  1. Emission schedule

There is no emission schedule. Whenever there is fluctuation in demand for UST that causes the price to go off peg, $1 LUNA can be swapped for 1 UST, and vice versa.

  1. Token (& Protocol) permissions (minting) and upgradability

As Stani pointed out in my last post, the minting function for UST is currently EOA. As I’ve mentioned to the team, we’ve been intending to migrate to a more decentralized proof of authority bridge created by the Wormhole team (https://solana.com/wormhole). But given the dependency on a 3rd party, it’s hard to put an exact estimate on go-live.

Given the history and robustness of our stablecoins over the last 3 years, we believe that the centralized properties of UST would pose low risk to the Aave ecosystem.

  1. Market data (Market Cap, 24h Volume, Volatility, Exchanges, Maturity)

Market cap: $1.8B total, $300M on Ethereum: https://etherscan.io/token/0xa47c8bf37f92abed4a126bda807a7b7498661acd
24 hour volume: $160M
Volatility: peg has maintained stability
Exchanges: Curve, Sushiswap, Uniswap, Balancer, Kucoin, Bittrex

  1. Social channels data (Size of communities, activity on Github)
  1. Contracts date of deployments, number of transactions, number of holders for tokens
    No. of transactions: 130,000
    No. of holders: 6,270
10 Likes

its about time! UST showed very strong resilience to market volatility and have been growing very fast tapping into traditional markets with Anchor and synthetics of mirror really showing Terra building products for masses. I would be 100% supportive of this proposal and also would like to see wrapped AAVE on Terra!

3 Likes

UST is the most successful Algo-stable coin to date with many use cases. It would be silly for Aave not to support it.

3 Likes

Really happy to see this proposal to add support for UST – as a longtime AAVE and LUNA holder nothing would be better than for a partnership here imho.

What i think shouldn’t be underestimated by AAVE community is the incredible growth of UST since early December 2020 when the Mirror.Protocol was launched. Already with over 2.1 billion in TVL - both Mirror and Anchor savings protocol are quickly becoming ‘go to’ cash positions for crypto bulls taking profits and crypto bears seeking refuge.

A partnership with AAVE’s leading lending protocol on the most decentralized network ETH- would endear the growing base of TeFi ecosystem users (and UST tvl ) to the AAVE brand for years to come. I sincerely hope this proposal can garner enough support from the AAVE community. Thanks for your consideration here…

Sincerely,
nachodon - a fairly large UST holder (and aave too)

1 Like

$UST had a pretty impressive growth in the last 6+ months and has shown incredible resistance to deviating from the peg. Fully support this proposal. Will be a mutually beneficial thing for Aave & TerraUSD and hoping that it will open more use cases.

1 Like

I’m a big UST holder and I’ve been waiting for this – spreading my UST accros multiple platforms is a must. Would love to see this.

1 Like

UST is backed by a volatile asset (LUNA) without any excess collateralization. imo it’s probably not suitable to be a collateral asset, but would be a great fit to add as a borrowable asset.

1 Like

I’m supporting this proposal , UST has been battle tested heavily with the growing demand generated by Mirror and Anchor and the strength of the peg has proven more robust than any other algorithmic stablecoin out there

Some stats on Terra stablecoins including UST can be found here:
https://terra.flipsidecrypto.com/

This gets my full support, especially because I really want to see mirror Tokens on AAVE. Would be really interesting to see stocks as collateral. It could be a huge draw for Defi as a whole. Stocks are a pretty safe collateral and not as volatile as crypto.

I want to bump this thread, because I dived a little deeper into Terra and I really think we need an algorithmic Stablecoin that is not dependend on centralized exchanges but also doesn’t rely on overcollaterization like DAI or other algorithmic Stablecoins.

I’d like anyone interested to read this reddit thread on why we need stablecoins like UST in the ecosystem