Terra validators restart network after second outage in 24 hours

Against the backdrop of the collapse of the native token LUNA and the algorithmic stablecoin UST, Terra validators halted the network for the second time in a day. They attributed the move to the need to devise a ‘recovery plan’ for the network.

The Terra blockchain has officially halted at block 7607789.

Terra Validators have halted the network to come up with a plan to reconstitute it.

More updates to come.

— Terra (UST) 🌍 Powered by LUNA 🌕 (@terra_money) May 13, 2022

On May 12, validators had already stopped the network to prevent governance attacks, which became possible due to the dramatic drop in LUNA’s price. They resumed work the same day, disabling the delegation function.

Terraform Labs did not disclose what measures the company intends to take to fix the situation. Previously presented initiatives did not save ecosystem assets from almost complete devaluation.

On May 10, UST lost parity with the US dollar — the stablecoin has yet to regain its peg. At the time of writing it was trading around $0.13, according to CoinGecko.

The LUNA cryptocurrency, used to issue UST, has fallen by nearly 100% over the past seven days. On May 6 the asset traded at over $80 — at present its price is $0.000059 (Binance).

One of the measures proposed by the developers involved expanding the base pool of LUNA and increasing the supply of the cryptocurrency. This was supposed to enable a faster withdrawal of the required amount of UST from circulation.

The activation of the proposal led to the circulating supply of LUNA exceeding 6.5 trillion coins. The UST supply is estimated at 11.3 billion, according to SmartStake.

Amid the decline in Terra’s native token price, crypto exchanges began winding down operations with the coin. On May 12 Binance delisted base-asset-denominated perpetual contracts for LUNA.

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

Binance will remove and cease trading on the following spot trading pairs at 12:50am UTC, May 13:
🔸BTC/UST
🔸LUNA/UST
🔸ETH/UST
🔸BNB/UST
🔸UST/USDT

Binance will remove and cease trading on the BUSD-Margined Perpetual Contract: LUNA/BUSD trading pair at 1:30am UTC, May 13.

— Binance (@binance) May 13, 2022

Following the exchange’s decision, there was a large inflow of LUNA to Korean exchanges.

More than 2 billion #LUNA flowed into Korean exchanges after Binance decided to delist LUNAhttps://t.co/B5aaaAcP1K

— 8BTCnews (@btcinchina) May 13, 2022

Huge volatility in LUNA led to price display problems on Chainlink’s decentralized oracle network, used by many DeFi projects.

Official team statement on the Chainlink LUNA/USD Price Feeds situation pic.twitter.com/EjA5naYalu

— ChainLinkGod.eth (@ChainLinkGod) May 13, 2022

The lending protocol Venus Protocol reported a loss of $13.5m. Chainlink oracle settings do not permit displaying LUNA price below $0.1 (the actual value at the time was around $0.01). Attackers exploited this — they deposited millions of tokens on the platform and used them as collateral.

Venus on #BSC was exploited for $13.5m today because whoever set that min-price limit probably assumed $LUNA would never collapse so hard.

This is wild! #chainlink $LINK https://t.co/6DwXnw2ilY pic.twitter.com/j3mC9hPJJ4

— DefiMoon 🦇🔊 (@DefiMoon) May 12, 2022

The same exploit was also reported by Blizz Finance on the Avalanche blockchain. It is not known what damage was inflicted on the project.

We have built on the AVAX ecosystem in good faith with the expectation that @chainlink oracles would behave as expected. Sorry to those affected.

— Blizz Finance (@BlizzFinance) May 13, 2022

As CoinDesk reported, Do Kwon was one of the anonymous co-founders of the collapsed algorithmic stablecoin Basis Cash.

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