Terra's rapid collapse triggered a crypto market sell-off, billions in lost assets, and a rumored class action lawsuit.
But now Terra's most valuable asset - developer loyalty - is being challenged.
With the launch of Terra 2.0, projects must decide whether to remain loyal to the Terra ecosystem or take a different path. Competing blockchains offer them great advantages to develop on greener pastures. Will they stay or will they go?
When Terra's native LUNA token lost 99% of its value, other Terra Project tokens were also caught in the sell-off, depreciating the once-thriving Terra ecosystem by nearly $40 billion. Terra was, in fact, more than UST.
"Terra projects are exploring different options," said Dan Edlebeck, co-founder of Sei Protocol, a decentralized financial blockchain (DeFi) in the Cosmos ecosystem. "They're looking at what makes sense from a technical perspective, and in some cases letting their community decide."
These developers are also facing poaching attempts from Terra's competitors, with some blockchains even putting up eight-figure sums to sweeten the deal.
Poaching developers
Terra developer Neel Somani, 24, quit his job at hedge fund Citadel to work on Terra just a month before UST's launch. It was so remarkable that the New York Times sang of his misfortune in a poem.
His project, Terranova, aimed to bring Ethereum compatibility to the Terra blockchain. Integrating Terra with the Ethereum Virtual Machine (EVM) could bring an influx of new projects to the Terra blockchain, he reasoned.
With his current project now "on pause," Somani says he faces uncertain next steps.
"Many ecosystems have come forward, including Avalanche, Secret Network and Osmosis," Somani told CoinDesk.
Avalanche is an EVM-compatible blockchain that has already partnered with Terra. Secret Network, a privacy-focused blockchain, and Osmosis, with its focus on DeFi, are also based on Cosmos technology.
Somani said those projects typically send him a link to a funding proposal, along with a handful of ideas the network finds attractive. He has also received "a handful" of interview requests from various protocols.
"At this point, I haven't committed to anything," Somani said.
DeFi talent
Dan Eskow, founder of Up Top, a staffing firm specializing in crypto jobs, said developer talent is in hot demand, especially engineers with experience developing on Terra.
"There aren't many engineers who have been deep enough in DeFi to scale a project to that level," Eskow told CoinDesk.
Before the collapse, Terra's UST reached a market cap of $18 billion and the Terra ecosystem was the second largest DeFi Total Valued Locked (TVL), according to data from DeFiLlama.
"Terra's engineers built a strong product," Eskow said. "The failed strategy is not a reflection of their work, and there are many projects with less ballast that they would stop immediately."
In short, the failure of one prominent algorithmic stablecoin also sunk the fortunes of other projects that had nothing to do with UST.
In the crypto industry, the chronic shortage of developers has left blockchain projects scrambling to find good talent.
"One of Terra's strengths was DeFi," Sei's Edlebeck said. "It wasn't just Anchor. Terra had borrowing and lending, it had derivatives, it had a money market."
Edlebeck said he would like to see a "more robust" ecosystem on Cosmos, adding that Sei Protocol has begun working with a former Terra team to develop a Perpetuals product.
"I think Cosmos and its design architecture is ready to see a lot of new activity," Edlebeck said. In particular, Terra itself is based on Cosmos technology.
In addition to engineers, crypto recruiter Eskow is also looking to poach talent from funds that suffered big losses at Terra in hopes that struggling employees will decide to jump ship.
Kadena, Polygon launch Terra support fund.
In an effort to attract more talent, blockchain projects like Kadena and Polygon announced this week that they will provide millions in funding to support projects affected by the turmoil on Terra - provided the project agrees to build on their respective chains.
Kadena, a Layer 1 blockchain founded in 2016, announced a $10 million Terra aid fund on Thursday to lure projects into its ecosystem.
"We are supporting anyone affected by this mini meltdown," said Francesco Melpignano, CEO of Kadena Eco, Kadena's growth arm. "We don't want to dance on people's graves."
Melpignano stressed that the funds will not only benefit Terra developers, but that projects that have lost seed money, for example, by depositing funds in Anchor, will also be eligible for support.
"This is a defining moment for the blockchain industry," Melpignano told CoinDesk. "It goes beyond Terra."
Polygon, an Ethereum sidechain, has also announced a multimillion-dollar fund to support Terra projects looking to build in the Polygon ecosystem. The fund would allow developers to cover unforeseen costs of transferring their businesses from Terra to Polygon.
"When we experienced the unfortunate collapse of Terra, many developers were left without a home," said Ryan Watt, CEO of Polygon Studios. "The failure of Terra shouldn't punish [the decentralized applications] built on top of it."
Watt declined to comment on the exact amount of the fund to "make sure developers don't feel pressured into making a decision and give the impression that there's only a limited amount of money available."
He also advised project teams to build where the users are and to build in a way that is compatible with EVM.
"The important point is that we set aside millions of dollars, whatever it takes, to make sure that developers have a home to move to and continue to build in Web 3," Watt told CoinDesk.
Terra 2.0
Terra projects such as NFT marketplace RandomEarth, DeFi protocol Nebula and decentralized exchange Phoenix Finance have publicly expressed solidarity with Terra 2.0, with Terraform Labs founder Do Kwon retweeting the messages to his many followers.
Representatives of a Terra project who spoke to CoinDesk on condition of anonymity, however, said that supporting the new chain is not exactly the same as committing to build on Terra.
"Terraform Labs has been extremely good to us as developers, so we want to support them in launching the fork, but we can't commit to building on Terra yet," a Terra developer told CoinDesk. "The thought is that there is no downside to joining Terra until things become clearer with the new chain."
Sei Protocol's Edlebeck said he has been in close contact with several top Terra projects in recent weeks, including the team at Delphi Labs, a major investor in the Terra ecosystem.
"The project founders are really exploring other options, even more than I expected," Edlebeck said. "Too much is up in the air with Terra 2.0, and the path forward is being questioned."
Developers keep BUIDLing
Despite the uncertainty about where to build next, Kadena's Melpignano hopes developers won't leave the field altogether.
Retaining Web 3 talent was another motivating factor for Kadena's $10 million fund, Melpignano acknowledges.
"Now is the best time to build," Melpignano says. "Now the category-defining applications are being born."
Even for those scarred by Terra's demise, cryptocurrency - with all its ups and downs - seems to have left a mark on the talent it attracts.
"A couple of hedge funds have also approached me and asked if I want to return to traditional finance," Somani, the former Citadel employee, told CoinDesk. "But I'm all-in on crypto."