Review and Rating
Terra System Review and Rating
SVET.System (Security-Velocity-Engineering-Transparency)
Security: Terra is a decentralized blockchain platform. It represents a complete ecosystem that includes a mechanism for providing stablecoins and maintaining the exchange rate, blockchain oracles and smart contracts that automatically process transactions on the platform. Terra differs from other platforms offering stablecoins in compatibility. Terra operates on several blockchains that provide higher decentralization. To achieve higher decentralization Terra uses Cosmos SDK and technology Inter Blockchain Communication. According to Security audits performed on the network by Certik there is no recorded security breach, moreover, there are no known cases of hacking. There are no publicly known cases of protocol violations. During the audit there are no major or critical issues related to the codebase. Security rating is b
Velocity: Terra protocol works on the Proof of Stake (PoS) consensus mechanism that allows increasing the speed of transactions. At the moment of writing the review, there are 100 validating nodes (validators who obtain the largest amount of native token Luna), they provide the operation of the network. In the future, the number of validating nodes will be increased to 130. Eventually, it takes about six seconds on block time, Terra can scale up to 10 thousand TPS it regards to using Cosmos Tendermint, transaction fees is just several cents. Velocity rating is c
Engineering: Terra protocol is open-source public blockchain for algorithmic stablecoins. For stability stablecoins, Terra protocol uses arbitrage incentives and decentralized oracle voting that allows creating stablecoins that track the price of any fiat currency. The protocol consists of two main tokens – Terra and native token Luna. Terra is indeed stablecoins, minting of new terra providing by burning Luna tokens. The second main token – Luna provides stability of stablecoins by absorbing volatility of Terra, besides Luna using in validations, users stake Luna to validators. As it was mentioned earlier Terra is PoS blockchain which powered by the Cosmos SDK and secured by a system Tendermint. To maintain the stability Terra uses main economic principles – basic market forces of supply and demand: when demand for Terra is high the supply is not able to provide demand, the price increases; when demand is low and supply is large, the price decreases. Regulation of stability provides by burning tokens: if the price increses Luna tokens are burned to mint Terra and opposite if the price decreases Terra tokens burn are burned. Real assets provide majority stablecoins. There are only one stablecoin with similar technology – FRAX, in compering Terra has more scalability. Engineering rating is A-
Transparency:
The Terra is a highly decentralized network with 100 validators. Compering to major stablecoins which stability is provided by real assets as USTecher or Dai, Terra stability is provided by economic principles of demand and supply. Terra protocol is actually open for outside audit and moreover, developers of the project take an active part in audit. 1 month ago, the total amount of holder’s token Luna is more than 60 thousand now the number of holders increased. Transparency rating is b
Rating: b / c / a- / b
References:
1. Website of the project https://www.terra.money/
2. Technical document https://docs.terra.money/index.html
3. Terra GitHub https://github.com/orgs/terra-money/repositories?type=all
4. CoinMarketCap https://coinmarketcap.com/currencies/terra-luna/holders/
5. Certik https://www.certik.com/projects/terra
6. Certik audit for Terra 2019 https://medium.com/certik/certik-has-completed-a-security-audit-for-terra-project-e91fb81c371b
7. Certik audit for Terra 2020 https://medium.com/certik/certik-audits-terras-new-cosmwasm-smart-contract-solution-67178e96188