Everything you need to know about "getting rich": KASH! Terra Ecosystem Glossary of Acronyms / Terms You’ll find a reasonably comprehensive glossary with definitions for key terms and acronyms around the Terra Ecosystem listed below.
General Terra Ecosystem Terms
- Anchor Protocol: A savings protocol on the Terra blockchain that offers yield powered by block rewards of major Proof-of-Stake blockchains. You can think of the Anchor Protocol as a website where you send UST.
- Liquidation: The process on the Anchor Protocol whereby a borrower loses money on their collateral permanently due to having insufficient collateral value. This protects Kash customers who put their money into the Kash Savings Account to earn interest. Liquidation occurs when the LTV ratio is less than 1:2. When a liquidation event occurs, a borrower pays a (1) liquidation fee and (2) has some collateral removed from the account to pay back a portion of the loan.
- Luna: The name of the primary token in the Terra ecosystem. Just as Bitcoin is the token on the Bitcoin blockchain and Ether is the token on the Ethereum blockchain, so is Luna the token on the Terra blockchain. Seniorage: This is the process for when Luna swaps into Terra, the Luna that is recaptured by the protocol is burned. This is the value generated from issuing new Terra.
- Mirror: a protocol that allows anyone to issue synthetic assets (like stocks) that track arbitrary real-world assets using public blockchain technology. Through the Mirror protocol, people in emerging markets can purchase synthetic ETFs (like SPY) and stocks (like AAPL, TSLA, etc.). More info HERE
- Ozone: an insurance protocol that protects Terra ecosystem participants against technical failure risks. This ranges from smart contract failures of protocols to failures of economic assumptions (i.e. aUST cannot claim UST tokens due to money market illiquidity). More info HERE
- PoS: Proof-Of-Stake. This is PoS: only operators with a lot of currency staked can validate transactions. This avoids manipulation because you need a huge amount of currency to manipulate the network.
- Staking: Staking is the process of sending your Luna to a validator for a certain period of time in order for that validator to confirm transactions across the Terra ecosystem, which then earns that validator additional Luna as a reward for participating in this process. Holders of Luna are rewarded additional Luna by taking part in the network consensus process. By staking, you’re basically just saying to a validator, “I trust your pool,” but in a way that’s completely (a) non-committal (you can change your mind at any time), and (b) risk-free (as validators cannot control/sell/steal your Luna). Functionally, when you stake Luna, it enables you to earn interest on your asset, like a dividend stock (except you receive rewards every 6 seconds).
- Terra Ecosystem: The name of the entire ecosystem created by Terraform Labs. The Terra ecosystem covers all activities on Terra Station, Anchor Protocol, Mirror Protocol, Kash, and other third-party projects built independently on the Terra blockchain.
- Terraform Labs: The company that created the Terra ecosystem.
- TerraStation: The web wallet created by TerraForm labs where users can swap UST -> Luna, stake coins, and see a dashboard with summary information from the entire Terra ecosystem. Kash also allows you to do all this and earn up to 15% interest rate on your Savings Account. This is available via download (HERE) or chrome extension (HERE) or you can just get a Kash account :)
- Tx: Transaction fee. Whenever actions are taken in the Terra ecosystem (i.e. swapping an asset, claiming an airdrop, sending coins for governance, staking), transaction fees are collected. Depending on the type of transaction, these fees range between 10 cents USD and 25 cents USD.
- UST: The US Dollar stablecoin in the Terra ecosystem. What makes UST different than other stablecoins like USDC and USDT is that $1 of UST is not created through depositing $1 fiat dollar, As new UST is created, an equivalent dollar amount in Luna must be burned. See video
- Validator: One of the Terra network participants that “validate” transactions in the Terra ecosystem. They “listen” to the transactions broadcasted in the network, group several of them together (in what’s called a “block”), authenticate (like a notary), and publish them. For more details on validators, check the validator FAQ. There are currently 100 validators in the Terra ecosystem (visible via Terra Station) where individuals can stake their Luna too.
Terra Ecosystem Terms
- Angel Protocol: A project developed by a third-party ecosystem entity that aims to provide no-cost donations to various nonprofits by using the rewards generated from the Anchor Protocol.
- Chai: A South Korean company that uses the Terra blockchain to power its mobile payments.
- Cosmos: The blockchain technology that the Terra ecosystem is built off.
- Terraswap: A website where users can exchange various assets in the Luna ecosystem. Link HERE
- Intellabridge: The parent company that created the Kash DeFi product. This is a publicly traded company listed on the Canadian Stock Exchange and was the very first third-party company to receive investment from Terraform Capital.
- Kash: An application that allows non-crypto-experts (normies!) to participate in decentralized finance. Kash empowers people by (1) enabling them to connect their cash (held in bank accounts, crypto exchanges like Coinbase, etc.) to the Terra ecosystem, (2) enabling them to spend crypto everywhere via a debit card, and (3) enabling them to send money to other Kash users (like Venmo or Cash App).
- KRT: The South Korean currency equivalent of UST, a stablecoin that is pegged to the value of the Korean Won (KRW).
- PaywithTerra: A project developed by a third-party ecosystem entity that enables merchants to accept UST for transactions. Link HERE
- Pylon Protocol: A suite of savings and payments products that enables sustainable exchanges between long-term value providers and their consumers through customizable deposit contracts and yield redirection. More information HERE
(Note: If you’re an ecosystem partner and would like to be added here, please email social@kash.io with a punchy two sentence description of your protocol and a link to more information!)
Market/Financial Terms
- ANC: The acronym for the Anchor token, which is part of the Anchor Protocol. In the Anchor Protocol, you can receive ANC tokens by borrowing UST or by being a liquidity provider.
- Airdrop: When users in the Terra ecosystem receive “free” tokens (i.e. MIR, ANC) from staking their Luna on Terra Station.
- APR: The annualized rate of interest for a given action. For example, by borrowing $1000 with a 20% borrow APR, this means that over the course of the year, the loan value becomes $1200 (if the APR is stable). However, in real life, borrow APR fluctuates constantly throughout every day, so the current APR should not be relied on as a definitive indicator of expected long-run rates.
- Bassets: These are derivatives of the main assets (i.e. Luna -> bLuna). In the Terra ecosystem, when Luna can be turned into bLuna, it can become collateral to borrow money in the Anchor Protocol. It takes 21 days to convert a derivative asset back to its base asset, but during that period of time it still earns staking rewards to the system. This is a huge innovation of the Terra ecosystem because once the competitive landscape of token incentives decrease, a user can simply come to Anchor deposit his bETH or bSOL and get an interest -free loan. How? Because yield on their asset pays for thei rloan. Not only this. Since the loan position is overcollateralized, a staking yield of 10 percent on collateral actually becomes 30 percent yield on borrowed capital (assuming 33 percent LTV)
- Bonding: The process where an asset in the Terra ecosystem (i.e. Luna) is converted into a derivative asset (i.e. bLuna). Turning a base asset process occurs instantly and can be performed via TerraStation.
- Delegator: Delegators are Luna holders who cannot, or do not want to run validator operations themselves. Through Terra Station, a user can delegate Luna to a validator and obtain a part of its revenue in exchange. Because they share revenue with their validators, delegators also share responsibility. Should a validator misbehave, each of its delegators will be partially slashed in proportion to their stake.
- Impermanent Loss: In Anchor, for example, you put in 50:50 of UST and ANC tokens at the current market rate. When you withdraw you get 50:50 of each token at the new market rate. If that results in a loss it’s called impermanent loss because if you wait long enough the fees earned should catch up to any losses, thus “impermanent”. Although, depending on the ratio, pool volume, waiting long enough could be waiting years. Liquidity providing is a riskier tactic in Decentralized Finance that should be approached with caution for veteran users.
- LP: Liquidity Providing. This is the process whereby you provide your coins, thus making them available for other participants to borrow against. Note that this is completely separate from staking.
- LTV: Loan-to-Value. This is a ratio of how much your loan value is to how much collateral you have in a system. Having a $1000 loan to $4000 collateral is a LTV of 0.4, or a LTV ratio of 1:4. If your LTV ratio is lower than 2, then you are automatically liquidated by the system. For example, if you have $1000 in a loan value but only $1999 in collateral you are liquidated.
- MIR: The acronym for the Mirror token, which is part of the Mirror Protocol. In the Mirror Protocol, you can receive ANC tokens by borrowing UST or by being a liquidity provider.
- Minting: The process of creating a collateralized debt position on Mirror protocol.
- Overcollateralization: The concept of having more collateral in your loan than the amount you’re borrowing. In the Anchor Protocol, your collateral is denominated in bLuna, while your loan is given to you in UST.
- Slashing: The process whereby a validator is penalized (for a variety of reasons) and they (along with all token holders who delegated tokens to that validator) no longer receive staking rewards
- Tendermint: The eco-friendly PoS process that the Terra ecosystem uses to validate transactions. Tendermint is what makes it possible for Kash to offer eco-friendly decentralized neobanking solution. The current estimated annual energy consumption (measured in TWh) of running the Bitcoin network for a year is 121.86 TWh, while Ethereum consumes around 52.27 TWh per year. By comparison, the estimated yearly consumption of a Cosmos-based blockchain is less than the energy consumed by Bitcoin and Ethereum in a single day (0.00046647 TWh). Link HERE
- UnBonding: The process where a derivative asset in the Terra ecosystem (i.e.b Luna) is converted back into its base asset (i.e. Luna). The “unbonding” process takes 21 days to complete, during which no staking awards are given to the owner of that Luna. The unbonding process can be performed via TerraStation.
Anchor Terms
- ANC: Anchor token. This is the name of the governance token that is given to borrowers as a “reward” for borrowing money in the Anchor protocol. These ANC tokens are meant to incentivize individuals to borrow and are distributed every block (which is approximately seconds).
- Borrow APR: This refers to the interest rate owed in UST for a borrower. This is a variable number that dynamically changes (around every 6 seconds) based on an algorithm comparing total borrow and earner activity in the Anchor Protocol.
- Distribution APR: This refers to how many ANC tokens a borrower receives. This is a variable number that dynamically changes (around every 6 seconds) based on an algorithm comparing total borrow and earner activity in the Anchor Protocol.
- Governance token: Generally in crypto, governance tokens are tokens that allow you to propose and vote for changes in the protocol, for example adding new coins to be used as collateral. Governance tokens in the Terra ecosystem currently include Luna, ANC, and MIR.
- TVL: Total value locked. This refers to the total dollar value held within the Anchor Protocol at any given period.
Terra Technical Terms
- Block: These are files where data pertaining to the Terra network are permanently recorded. A block records some or all of the most recent Terra ecosystem transactions that have not yet entered any prior blocks.
- Columbus-5: The latest iteration of the Cosmos blockchain that the Terra team will be implementing. Columbus-5 enables more interoperability with the addition of the Shuttle bridge module to create a message bus with multiple other blockchains. More info HERE
- Node: These are programs that validators run in the Terra blockchain and they get rewarded for doing so.
- Oracle: The Oracle module provides the Terra blockchain with an up-to-date and accurate price feed of exchange rates of Luna against various Terra pegs so that the Market may provide fair exchanges between Terra<>Terra currency pairs, as well as Terra<>Luna. More info HERE
Do you find this overwhelming? That’s why our crypto-expert team at Kash is here to simplify participating in the decentralized finance world.
If you have any questions, please don’t hesitate to reach out to us via Kash app. We are committed to bring DeFi opportunities to people all around the world.
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If you think any of these definitions can be improved, please propose your definition to social@kash.io . Keep in mind some of these definitions are intentionally over-simplified.
Helpful Resources
Terra Ecosystem Whitepaper — LINK
Anchor Protocol Whitepaper — LINK
Anchor 101 Explainer Infographic — (coming soon!)
Kash Website — LINK
Anchor Tutorial For US Residents — (coming soon!)
Official Terra Introduction Overview Video — LINK
Official message board community for Terra ecosystem — LINK
Media
- Ark Invest interview with Terra CEO — LINK
- Interview between Robinhood CEO and Terra CEO — LINK
- How does Kash get 10% earnings rate account? — LINK
- How does Kash overcome discrimination? — (Link coming soon!)