Terra's Implosion Underscores Crypto Sector's Ability To Quickly Pivot

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Crypto Startup Tries to Claw Its Way Back From Luna Disaster

The implosion of the algorithmic stablecoin TerraUSD and its sister Luna token sent shock waves through the cryptosphere, crashing prices and roiling the entire ecosystem behind the coins. 

The fallout reached across geographies, too. Stader Labs, based in Bengaluru, India, is among the many crypto startups that were engulfed by the crisis. 

Stader, backed by investors including Three Arrows Capital, had built a lucrative business providing a platform for so-called staking, where holders allow their tokens to be used to help order transactions on a blockchain in exchange for earning yield. Before the crash, almost all of that business came from the Luna coin, which like TerraUSD ran on the Terra blockchain and reached an all-time high in early April. 

When TerraUSD (UST) collapsed from its intended 1-to-1 peg to the dollar this month and dragged Luna down with it, the impact on Stader's business was swift. The total value locked on its protocol has dropped to $50 million from about $750 million just before the event, data from industry tracker DeFi Llama show. 

“We had a 40% hit on revenues,” co-founder and Chief Executive Officer Amitej Gajjala said in a text message. Stader's monthly fees from its protocol had reached $6.3 million before the crash, he said.  

Gajjala's experience highlights the hazards that lurk in the decentralized-finance space, where crypto holders borrow, lend and stake coins without intermediaries like banks. Because of the nature of its link with UST, the price of Luna has fallen close to zero, causing staking of the coin on platforms like Stader to evaporate. 

To some extent, the Terra implosion also underscores the crypto sector's ability to