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Terra validators restart network after second outage in a day

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Against the background of the collapse of the native token LUNA and the algorithmic stablecoin UST, Terra validators stopped the blockchain for the second time in a day. The step was explained by the need to develop a “recovery plan” for the network.

Update:

Terraform Labs announced the decision of the validators to resume the operation of the blockchain. The network is up, but on-chain swaps are disabled, and channels IBC closed. Users were encouraged to migrate wrapped assets like bETH to native platforms.

On May 12, validators were already shutting down the network in order to prevent “governance attacks” that were made possible by the dramatic depreciation of LUNA. Work resumed on the same day, turning off the delegation function.

This time, Terraform Labs did not say what measures the company is going to take to remedy the situation. The initiatives presented earlier did not save the ecosystem assets from almost complete depreciation.

On May 10, UST lost parity with the US dollar – the stablecoin was never able to return the peg. At the time of writing, it is trading near $0.13, according to CoinGecko.

The LUNA cryptocurrency, which is used to issue UST, has fallen in price by almost 100% over the past seven days. Back on May 6, the asset was worth more than $80 – at the time of writing, its price is $0.000059 (Binance exchange).

LUNA/BUSD hourly chart on Binance exchange. Data: Trading View.

One of the measures proposed by the developers involved expanding the base LUNA pool and increasing the emission of cryptocurrency. This would supposedly allow the required amount of UST to be withdrawn from circulation more quickly.

The activation of the offer resulted in the number of LUNA in circulation exceeding 6.5 trillion coins. The UST offer is valued at 11.3 billion, according to SmartStake.

Against the backdrop of a decrease in the price of the native Terra token, cryptocurrency exchanges began to curtail operations with the asset. On May 12, Binance delisted LUNA perpetual contracts settled in the underlying asset.

On May 13, the platform removed almost all trading pairs with LUNA and UST, as well as BUSD-settled LUNA perpetual contracts, from the spot market. The exchange allowed users to sell assets for BUSD.

After the decision of the trading platform, the network recorded a large influx of LUNA to Korean exchanges.

The huge volatility of LUNA has led to price display issues on the Chainlink decentralized oracle network that many DeFi projects use to operate.

The Venus Protocol landing page reported a loss of $13.5 million. Chainlink’s oracles settings do not allow them to display the price of LUNA below $0.1 (the actual cost at that time was about $0.01). The attackers took advantage of this – they contributed millions of tokens to the platform, using them as collateral.

A similar exploit was also reported by the Blizz Finance protocol on the Avalanche blockchain. It is not known what damage was done to the project.

Recall that CoinDesk journalists learned that Do Kwon was one of the anonymous co-founders of the crashed algorithmic stablecoin Basis Cash.

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Fidenge Pecold
https://extremedaytradingreview.com

My profession is a journalist, but my hobby for 8 years has been studying Forex investing and trading. During this time, I managed to gain extensive experience in investing and trading cryptocurrencies and double my capital in the Forex market. To be the author of this magazine, the site owners invited me to participate in one of the 2020 trading webinars, and I will try to reveal the most relevant crypto market news for you.

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