As you may know, Terra built their project on Cosmos. Just like many other projects on the network, they used Tendermint and the Cosmos SDK. So, it may come as no surprise that the whole Terra debacle tested the platform hard. The ATOM token dropped in price. In the same vein, the TVL on the Cosmos Hub also took a hit. However, we are more interested in how the tech side fared.
Cosmos or the Internet of Blockchains has a good reputation for developing blockchains. How did they come out of this stormy water? Let’s have a look at how they managed.
1) Dear Cosmonauts & Lunatics,
We’d like to offer some words of wisdom, guidance and perspective in these trying times.🧵👇
— Cosmos – Internet of Blockchains ⚛️ (@cosmos) May 13, 2022
What Happened to Cosmos During the LUNA Crisis?
The Luna crisis was a test that Cosmos wasn’t waiting for, or did expect, for that matter. However, now that it is here, it shows how the protocol works and functions under high-stress factors. The sell-off of LUNA put a lot of stress on the system.
On one side there is the Terra’s LFG (Luna Foundation Guard) trying to sell off billions of funds to restore the UST peg. On the other hand, we have retail investors and plenty of other parties who are trying to sell off their LUNA. This is called a bank run. The blockchain version. Everybody and his dog were attempting to sell LUNA before it hit rock bottom. This resulted in a death spiral.
During this whole saga, the number of transactions increased. You can see this in the picture below. This is from Mintscan, the Cosmos explorer. The upper white arrow shows the number of transactions. The lower arrow shows the volume. There are clear peaks around the Terra/Luna situation. They base the graphs on a 30-day period. See the small downwards pointing arrow.
Source: Mintscan
Currently, Cosmos has 37 chains running on its system. That makes for a vast ecosystem. Chains and projects like Kava, Osmosis, or Secret Network are all built on the Internet of Blockchains. See the picture below. Together, they create many transactions and lots of volume. However, the intensity of the LUNA/UST situation put the system really under a test.
Source: Mintscan
How Is Cosmos Handling This Extra Activity?
Cosmos kept standing upright like a steadfast rock during and after the Luna crisis. Until the moment of writing, all the tech held out under extreme stress factors and scrutiny. The system didn’t waver and kept doing what they designed it to do. For instance, Tendermint, IBC, and the Cosmos SDK kept functioning at all times, as designed.
5) As always, the @cosmos ecosystem will continue to be a nurturing and safe environment for bold entrepreneurs to bring forth the Internet of Blockchains. Tendermint, IBC and the @cosmos SDK are showing the world how resilient & secure they are under extreme market conditions.
— Cosmos – Internet of Blockchains ⚛️ (@cosmos) May 13, 2022
The Internet of Blockchains also kept a cool head under high-pressure circumstances. For example, there were no black- or time-outs or stopping of the chain. Nothing of the kind happened, Cosmos kept performing as if it were just another day in the life of the blockchain space. The only stoppage of the chain that happened (twice) was by choice by LUNA to help prevent 51% attacks with new security patches. These attacks cost much less now that the price of LUNA is down 99%.
Furthermore, the Internet of Blockchains community is understanding and compassionate. They reached out to the Terra Luna community. However, let’s also be clear that it is not their task to compensate anybody financially. That is all part of the Terra Luna blockchain and its associates.
2) Firstly, this past week has been extremely difficult for the Terra ecosystem & the community of builders & investors that have supported the project since its inception.
Community values like unity, integrity & transparency will play a vital role in the weeks ahead. 💜💙💛— Cosmos – Internet of Blockchains ⚛️ (@cosmos) May 13, 2022
Conclusion
For the time being, we can commend Cosmos for standing tall and not wavering. The technology held up when it mattered. They appear to be ready for the next step up and forward.
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