Kim believes that the Oracle Pool will last longer than the 2-year window many predict.
In a Medium blog post released yesterday, Terra Classic core developer Edward Kim has debunked narratives that the Terra Classic network oracle pool will run out in 2 years.
No Money, Mo’ Problems? https://t.co/DZDSGvMrR3
— Edward Kim (@edk208) December 16, 2022
The oracle pool’s largest holdings are 271 billion Terra Luna Classic (LUNC) and 930 million TerraClassicUSD (USTC), per data from Terra Finder. The predominant narrative within the Terra Classic community is that after 2 years, the network will exhaust this pool.
It raises concerns for the Terra Classic community because allocations from the oracle pool, which is no longer seeing inflows make up 99% of all staking rewards, as explained by Kim. Consequently, if nothing is done to remedy the situation, Validators will run at a loss, with no incentive to verify transactions or secure the chain, effectively breaking the network.
Kim Believes Predictions Of Terra Classic’s Death Are Greatly Exaggerated
According to the core developer, the situation “may not be as dire as we think.” While Kim says the Oracle pool will face a steep decline after the first year, he shares calculations and a chart distribution that shows that the pool will endure well beyond the set 2-year mark. But even in this instance, it would still see staking rewards drastically plummet, which could still make network validation unprofitable.
To this end, Kim proposes increasing gas fees, the other contributing component of staking rewards on the Terra Classic chain. Kim reveals that a 6000% increase in gas fees on the network will still leave fees below 1 penny. The developer posits that increased gas fees combined with a 500% increase in on-chain volume could see danger averted and validator profitability sustained.
Kim believes this increased on-chain volume can come when the network achieves parity with Luna v2. Notably, developers are hopeful that when the network achieves parity with other Cosmos chains, its budding community will be able to attract developers to build on and for the chain, creating more avenues for people to utilize their LUNC holdings on-chain.
In the blog post, Kim expressed confidence that the network can achieve this by the end of next year.
The ideas expounded by Kim have received largely positive responses. It bears mentioning, though, that some people are less optimistic.
LunaVShape (@LunaVShape), who handles marketing and strategy for the LunaPunks NFT project expressing support for the idea, noted that the community should pass a vote to increase the gas fees.
Let’s make a vote, let’s increase gas fees!!!
So that the Oracle pool can get funding in time, before APYs loose attractive levels… #LUNC @LunaPunksNFT https://t.co/xlOMqlBiqq pic.twitter.com/JuCBHK5Szw
— LunaVShape 🌕 (@LunaVShape) December 17, 2022
Community influencer Classy (@ClassyCrypto_) described the article as “wonderful,” calling Kim the “GOAT” (Greatest Of All Time).
— Classy 👾 (@ClassyCrypto_) December 16, 2022
However, as highlighted above, not everyone was as excited. LUNC DAO CTO 0xEars (@0x_Ears), who had posted a thread nearly two weeks ago on the network’s imminent threat with the depleting Oracle pool, expressed the opinion that Kim’s plan of staking it all on achieving parity with Luna v2 was not ideal. According to 0xEars, Terraform Labs is more efficient than all the Terra Classic developer groups combined. Consequently, he does not see the network catching up in time, especially considering that these networks will only continue to advance.
0xEars, in his thread on the threat the community faces, championed the idea of developers focusing on finding and building a protocol-owned chain that will attract mass adoption and generate revenue for the chain to support validator fees.
Interchain Station Update
Meanwhile, in the medium blog post, Kim also details how developers planned to make the network compatible with the TFL Interchain Station.
Recall that on December 6, The Crypto Basic reported that the Terra Classic network would likely lose TFL Terra Station support. This is because TFL is working to transition Terra Station to an Interchain Station that will support all chains in the Cosmos ecosystem.
However, as outlined by TFL, the Terra Classic had to perform several upgrades and carry out a blockchain address prefix change to be compatible. While TFL has found a way to provide Terra Station support for Terra Classic, the chain remains incompatible with the Interchain Station.
Kim addressing the issue listed 19 upgrades that developers had to perform first. In addition, noting the risks of changing the address prefix, Kim says that developers and TFL are taking an active approach to find a solution that does not require this change.