Kujira started as a project on Terra. They were the first public marketplace for liquidated collateral — fancy talk for letting people buy bad debt. Things were going great, the community was growing, and the project was evolving.
Then, Terra collapsed. An event that was so monumental that it marked the start of the crypto bear market. Kujira lost ~50% of its funds before pulling out of Terra’s UST stablecoin. They got off light compared to others but they'd still lost a significant amount of money — somewhere around $3 million.
Watching Terra Fall
The collapse of Terra couldn't have come at a worse time. Kujira had just launched their DEX on the failing blockchain.
While Terra was falling, the three co-founders of Kujira sat in a call watching its value rapidly drop lower and lower.
Co-founder of Kujira, Dove said, "It's like trading, [we were] watching a position which is going to nothing. But you still have those doubts — "Hang on, if we sell now — it's going to recover. Then, just like that, we lost 25% of our funds". And then it was like, 30% of our funds and then 40%. Eventually, I said to the guys, let's just go. Let's cut it."
On the de-peg of a token outside of their control, founders turned to traders scrambling to save their position. The team rushed to find wallets and Ledgers to save the funds, all while they kept refreshing Twitter, anticipating a statement from Do Kwon.
Then, a tweet appeared from Do: "deploying more capital — steady lads". The token continued to fall. This didn't reassure the Kujira team and they continued to pull the plug.
This emergency state for the project lasted a full 24 hours — the team somehow managed to fit sleep into that period. Luckily, they saved 50% of their funding. This has enabled the project to sustain for a few more years.
"It was pretty much pandemonium," Dove told me. "We had to just pull the plug and thank God, we did. It was terrible."
A Silver Lining
Fortunately for Kujira, however, the project had already discussed leaving the Terra blockchain to create its own native chain.
"Two or three weeks prior to the crash we were saying to ourselves, well, if Kujira is going to be a hub — like already we have this pretty unique liquidations product and now we have a fully on-chain DEX — it's kind of weird for us to be a hub within another hub, it's going to be kind of confusing, right?" Dove told me, "Projects on Terra are expected to pretty much perform one function."
The founders and developers had already felt like they were outgrowing Terra due to the way they wanted to structure the future Kujira empire. So, once Terra was dead in the water and Kujira had pulled out of the project, it only made sense for them to build their own blockchain.
"Aside from the panic and obviously losing a bunch of our funds, the good news for us was that our direction was clear. It made the decision for us." Dove said, "on the 13th of May, we announced that we were moving to our own blockchain. That was basically the day that everyone was like, Okay, Terra is not coming back from the dead."
Building on Cosmos
The team decided to build their Layer 1 blockchain using Cosmos — the same project that Terra was built on.
Cosmos provides a service called Cosmos SDK which helps you easily create a blockchain "in three steps". The SDK has been branded as "the world's most used framework for building blockchains."
"I think we see the features available on Cosmos as really being like a clear winner," Dove told me. "The fact that you can IBC tokens from one blockchain to the other and not be using a bridge. That's a really big deal. Cosmos really does solve [a lot of cryptos problems]."
And, in a funny way, Kujira was inspired by what Terra was able to create using the Cosmos platform. Terra had a rapid climb into the top 10 cryptocurrency projects all off the back of Cosmos' framework. Their crazy innovations aside, Terra set an example of how Cosmos can be used correctly… but also what to avoid.
"We have to learn. We learned some of the good aspects in terms of, you know, garnering community or being bold, being brave." Dove said, "there are tonnes of lessons. And we definitely take the good ones and then look at the bad ones and make sure we do the opposite."
Building a Layer 1
Saying you want to build a Layer 1 blockchain is great! But actually doing it is another thing.
We often see projects fail at this stage due to disjointed workflows and obscured visions. Fresh projects fail to collect a group of validators, dedicated to the vision of the project. This wasn't the case for Kujira, the founders had a clear direction they all intuitively agreed on.
"I've also been a part of other projects like this, where, you know, there's like a management structure, and people kind of try and shoehorn sort of an old school way of running things," Dove said. "For us, when we think of something, we're always really in sync which is lucky."
An example of this, was when choosing to make their blockchain require semi-permission — rather than permissionless — meaning that Kujira's team must approve a new project to be built on the network. Straight off the bat, the three founders (Dove, Brett, and Hans) all agreed that they never saw Kujira as a blockchain with 3,000 projects on it. They wanted quality over quantity.
Kujira aimed to be a quality and safe environment. And, in a sense, this too was influenced by the destruction of Terra. They didn't want to risk someone creating a project under their name and rugging it, creating another mini-Terra.
It wasn't all just telepathy between the founders. Co-founder Hans seemed to be the visionary for the future of the project.
"Hans is an insane, insane developer who has a vision for stuff." Dove told me, "it was him who said, don't worry about CW-20 tokens (Terra's equivalent of an ERC-20 token) — let's have native tokens."
Because of this joint vision and a dedicated team, the Layer 1 blockchain launched in six weeks.
The Benefits of Your Own Chain
Since the creation of the Kujira blockchain, the team has not looked back.
"We're in charge of our own destiny now," Dove said. "Yeah, we might make mistakes, but at least they will be ours, right? That feeling of being really helpless and thinking like, well, there's nothing we can really do, that is eliminated."
Not only are they protected from another Terra situation but they are also garnering a stronger community. From day one, they had an army of 75 technically well-versed people rooting for Kujira. This number grew to 670 validators on their testnet.
They also love that they're now able to curate and onboard other protocols onto their blockchain.
"The fact that protocols come to us and they're like 'We were thinking about building with X but we would rather build on Kujira', that just feels so good." Dove said, "It's such validation that okay, you know, we were doing something right here."
Kujira has evolved from a project on the Terra blockchain, to a serious hub for serious investors in the crypto space. Their community is growing — not only in Discord members but in validators, developers, projects, and network participants.
Now, they're an independent blockchain — free from the shackles of another project — and they've learned from their scars inflicted by Do Kwon, what does the future hold for them?
"Ultimately, what I see this all leading to is a system that facilitates bringing the next billion users into crypto, but importantly, bringing people that don't have access to a lot of infrastructures," Dove told me. "[I see] it being the grownup DeFi hub of choice. If you're not going for a quick gamble, you'll come to us."