Thread by @sungjae_han

While everyone is super hyped up about Ethereum's London Hardfork and EIP-1559, I feel like the upcoming Columbus-5 upgrade on Terra is being relatively slept on.

A thread on Terra’s upcoming Columbus-5 upgrade and why it's a gamechanger 👇👇

Disclaimer: GBV have invested in several Terra Ecosystem projects 🌍

1) There are three key upgrades in the Columbus-5 upgrade:

1. Burn all seigniorage 🔥
2. Upgrade to Stargate - enabling IBC and protobuf migration (10x-100x tx speed)
3. Ozone and Wormhole Launch

I'll explain each of these key upgrades and their implications on the ecosystem.

2) "Burn all seigniorage". What does this even mean?

Let's first go through a high-level overview of $LUNA's killer tokenomics to understand seigniorage.

3) One of the backbones of the terra ecosystem is its stablecoin, $UST. It's a decentralized algorithmic stablecoin that is backed by $LUNA and price stabilized through arbitragers in a decentralized way.

4) Anyone can mint $UST by burning $LUNA, and the $LUNA burnt here is called 'seigniorage

This allows $LUNA to be deflationary when more $UST is minted and adopted.

5) As of now, a portion of the seigniorage burnt is reintroduced and goes to the community pool and oracle reward pools.

The Columbus-5 upgrade will burn ALL seigniorage, which means all $LUNA used to mint $UST will be burnt.

6) Considering the amount of seigniorage that is redirected to community pools, the extra burn is pretty significant.

Also, this creates a clear narrative: More $UST adoption, $LUNA price numba go up.

7) The next key upgrade to discuss is IBC enablement.

IBC is Inter-Blockchain Communication Protocol that enables Cosmos SDK based sovereign blockchains (Zones) to communicate with each other. It enables you to transfer tokens across zones and run multi-chain smart contracts

8) Recently, more and more zones/projects have started enabling IBC (e.g. Osmosis) or have announced intentions of enabling IBC (e.g. Sifchain, Gravity DEX, Secret Network).

9) Terra enabling IBC will allow Terra to play a key part in the growing IBC Cosmos ecosystem.

It will also
1. benefit from increased $UST adoption on different zones,
2. capture value across different zones, and
3. more liquidity will flow into Terra ecosystem

10) Along with enabling IBC, the Stargate upgrade implementation will make a transition from Amino to protobuf which does a 10~100x improvement in TPS.

11) Lastly, Ozone and Wormhole will be launched with the columbus-5 upgrade.

12) Ozone is another killer defi protocol along with Anchor and Mirror from Terraform Labs. It's an insurance mutual protocol that facilitates levered coverage of technical failure risks in the Terra DeFi ecosystem.

13) It will obviously lock up another huge amount of $UST and
bring additional safeguard to the ecosystem, further driving terra defi ecosystem's growth.

14) And Wormhole is a bridge that connects Terra to Solana.

Multiple Solana projects have already started adopting $UST. Saber and Mercurial (Two major stableswap projects on Solana) already has $UST pools and multiple other projects hinting at future collaboration.

15) However, as of now, only the ERC-20 version of $UST can be ported over to Solana which significantly increases friction. With Wormhole, $UST from Terra blockchain can be directly bridged over to Solana with minimal friction, and will lead to more $UST adoption in Solana.

16) In short, Col-5 upgrade enables a larger deflationary pressure on $LUNA's supply. It also introduces several key infrastructures to increase $UST adoption in the multichain universe.

17) The Columbus-5 upgrade is in testing stage, and it will be launched very soon although the exact date hasn't been announced yet.

wen col-5? @stablekwon @terra_money 🌍