The Terra blockchain was halted for the second time in 12 hours on Friday, as developers seek more time to come up with a recovery plan.
The move comes as LUNA- its native token- crashed to a value of below 1 cent, while the UST stablecoin’s dollar “peg” now stands at less than $0.2.
Terra had late on Thursday halted the blockchain, for about two hours. The developers said it was in order to prevent governance attacks, considering that LUNA prices have crashed nearly 100%. This drop in prices makes the blockchain extremely vulnerable to price manipulation.
Terra halted for more time to reconstitute
With this halt, Terra’s developers said in a tweet validators have halted the network to buy more time to reconstitute it. The blockchain was officially halted at block 7607789, at around 10:20 PM ET.
As of press time, the network is down for about three hours, with no further updates from the developers. Reconstitution measures could likely include improving network capabilities to handle higher transaction volumes, and may also see further efforts to support the UST peg.
Terra’s first shutdown sent ripples across the market, and exposed other platforms to price manipulation through LUNA swaps.
DeFi platform Venus Protocol said due to the pause, and a corresponding price feed pause by Chainlink, users were able to sell LUNA at over 100 times its market price on the platform. A separate report said this cost the protocol about $11.2 million.
While Terra has outlined several steps to recover value, LUNA and UST prices have continued their death spiral. The project intends to mint more LUNA and burn it to support UST prices.
Where will the project go now?
Mass withdrawals on the Terra blockchain have almost completely drained it of value, making any attempts at recovering highly futile.
There are also rumors that founder Do Kwon, along with the project’s backers could face strict regulatory action, although there is no official word on the matter.
Amid the market chaos, top crypto exchange Binance has delisted LUNA and UST, given that their volatility was also disrupting the exchange’s channels.
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