Terra’s Blockchain is Relaunched as LUNA Spirals towards Zero

The Terra network is producing blocks again after two pauses. However, LUNA has fallen to almost zero cents. Key Takeaways The Terra network has restarted again. The network was briefly paused Thursday to limit the risk of governance attacks, then went offline again a few hours later. LUNA effectively trades at zero due to this…

The Terra network is now producing blocks again, after two pauses. However, LUNA is now at almost zero cents.

Key Takeaways

  • The Terra network has restarted again.
  • The network was temporarily halted on Thursday to reduce the risk of governance attacks. It then went back online a few hours later.
  • LUNA trades at zero because of this week’s Terra meltdown. However, some developers are reportedly looking to revive the network under a new name.

The circulating supply of LUNA tokens is now over 6.5 trillion as the network’s death spiral continues.

Terra Resumes Block Production

The Terra network has restarted for the second time in 24 hours.

The Terra blockchain has resumed block production.

Validators have decided to disable on-chain swaps, and IBC channels are now closed.

Users should bridge off-chain assets such as bETH to their native chains.

Note – Wormhole bridge currently not available.

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

Terraform Labs, the development company behind the troubled Layer 1 network, posted an update Friday confirming that Terra was producing blocks again. “The Terra blockchain has resumed block production. The Terra blockchain has resumed block production. Users are encouraged to bridge off-chain assets, such as bETH, to their native chains.”

It comes after Terra validators halted the network early Friday at a block height of 7607789. It was also halted a few hours before that, at a block height of 7603700, but came back online shortly after. Validators issued a patch to disable delegations and the network was re-established shortly after 2/3 of its validators were online.

The network pauses come after Terra suffered one of the biggest crashes in crypto history this week. The Terra network’s algorithmic stablecoin, UST, is crucial. The network’s LUNA token started to fall after UST lost its dollar peg last weekend. The relationship between the tokens is the reason for this. Terra users can trade UST for $1 worth LUNA. This theoretically encourages arbitrage and helps UST return its peg. (Conversely, users can also earn a premium by burning LUNA if UST trades over $1). Holders attempted to sell their positions en masse this week after UST lost its peg following a series large-scale sales. This led to a spiral of destruction in which LUNA experienced hyperinflation, and quickly lost its value. It tanked 99% several days in a row and now effectively trades at zero. The network is now more vulnerable to governance attacks. It was therefore halted on Thursday. The LUNA supply is now over 6.5 trillion, and UST is worth only $0.10. Last week, the network was worth $30 billion and there were only about 340 million tokens in circulation.

While the community has declared Terra all but finished, there are rumors of a plan to revive the network in a new form. A developer posting under @stablechen on Twitter said early Friday that the community was “deciding on a new Terra” that would either restore the network to a date before the meltdown, remove Terraform Labs, or establish new tokenomics models for UST and LUNA. Terraform Labs, the official Twitter account for Terra, reposted @stablechen’s tweet. He later added that developers had begun rallying to revive the network “with actual decentralized ownership by its users, not Terraform Labs.” Crypto Briefing approached him for comment but had not heard back at press time.

Disclosure: At the time of writing, the author of this piece owned ETH and several other cryptocurrencies.

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