The Terra blockchain has completed Columbus-5, a hotly anticipated upgrade that is expected to make the system work more seamlessly with other cryptocurrency networks.
The upgrade began at 8:31 UTC Thursday, after the publication of block No. 4,724,000, and was finished roughly 2 1/2 hours later, when the development team declared the revamped chain stable and ready to use. During the migration, users were advised to refrain from sending transactions on the network or accessing their wallets, since the new version of the software is not compatible with its predecessor.
Columbus-5 “will enable dozens of applications to launch,” wrote Ryan Watkins, a research analyst at Messari, in the data provider’s newsletter this week.
Perhaps more importantly, it promises to let investors easily transfer assets from Terra to a host of other chains and vice versa. LUNA, the native asset of the Terra blockchain, has surged in 2021 and is currently the 12th-largest cryptocurrency by market cap.
The easy transfer of assets across networks stems from Terra now being able to use the Inter-Blockchain Communication (IBC) standard, which eases the exchange of data among all the networks that adopt it.
To be clear: IBC adoption is “subject to an on-chain governance vote on Terra before manually being executed on the network -– meaning it won’t be functional until activated by community vote,” Brian Curran of the Terra team told CoinDesk. “Governance votes on Terra have a 14-day voting period so IBC will go live on Terra sometime shortly after the voting period, assuming that it passes.”
At least 10 other blockchains have integrated IBC, the most famous of them being Cosmos, which was built with interoperability in mind. Around 13 or so other networks are working on it, according to an upgrade-tracking website whimsically titled “Wen Mainnet, Sir?”
Terra’s compatibility with other systems is set to further improve in the coming weeks, when yet another “bridge” protocol, Wormhole V2, is fully connected to the chain.
Wormhole will aid the movement of Terra tokens to and from two massively popular blockchains, Ethereum and Solana, according to an Aug. 9 blog post by Curran These networks’ native tokens, ETH and SOL, rank No. 2 and No. 7 among all cryptocurrencies by market capitalization, according to CoinGecko data.
“Cross-chain movements of UST and other Terra assets to ETH are currently available via our Shuttle bridge,” Curran told CoinDesk. “However, Shuttle will soon be deprecated for Wormhole, which allows more decentralized cross-chain transfers of UST and other Terra assets to both Solana and ETH.”
Technically, “Wormhole V2 is already live for Solana, ETH, and Terra,” Curran explained. Wormhole’s node operators, known as guardians, “support Terra for V2, but the front-end interface support that allows users to transfer assets in and out of Terra to Solana and Ethereum is not live yet. The Wormhole team is just awaiting the launch of Col-5 before launching V2 UI support for Terra, which should happen within a week after Col-5 goes live.”
Taken together, these enhancements have big implications for TerraUSD (UST), a stablecoin designed to hold its value against the U.S. dollar that runs on Terra.
“The upgrade could potentially accelerate … UST’s growth, gaining its market share in the decentralized stablecoin market as UST will be able to move cross-chain,” Kevin Kang, managing principal at BKCoin Capital, a digital assets hedge fund, told CoinDesk.
Messari’s Watkins was even bolder, suggesting that UST, currently the fifth-largest stablecoin with a $2.6 billion market cap, could overtake DAI, No. 4 among stablecoins overall with twice as much in circulation. That is a stated goal of Do Kwon, co-founder of Terraform Labs, which developed UST and Terra.
“The combination of these upgrades and integrations have the potential to accelerate UST supply growth substantially setting up UST to flip DAI,” Watkins wrote.