The Terra Network Is Generating Blocks Again, But To What End?

Block data showed that the Terra network was reactivated on Friday, after being paused twice in 12 hours.

The reactivation comes nearly 12 hours after the network was suspended by its developers, who said they planned to “reconstitute” the blockchain.

The move came as a surge in withdrawals congested the blockchain, bringing transaction speeds to a crawl. This caused several major exchanges, including Binance and OKX, to delist most LUNA and UST pairs.

World No. 2 Coinbase also recently joined its peers in limiting trading in the tokens, and will suspend their trade on May 27.

UST’s crash in particular has been catastrophic for Terra, given that a bulk of DeFi value on the platform was built around the token. UST is now trading below $0.2.

Terra begins trading again

Terra developers officially confirmed the reactivation in a tweet. They encouraged users to move all of their non-native assets, such as bonded Ethereum, off the chain.

Data from Atom Scan shows new blocks were generated on the Terra blockchain, about 12 hours after its suspension. Developers said the last block generated before the pause was 7607789. Latest data shows a block numbered at 7607839 has been generated.

Thousands of transactions were processed through the blocks, although it was not immediately clear what they entailed. But going by general sentiment around the blockchain, they were most likely withdrawals or sell orders.

While the developers have outlined a slew of different measures, including LUNA minting and UST burning, to support the two tokens, their prices have only deteriorated.

Terraswap back online, but in limited measure

Terraswap, one of Terra’s largest decentralized exchanges, said it is now back online. But this is only in a limited capacity, in order to run a recovery consensus. Currently, most aspects of Terra are being largely diverted towards trying to maintain the UST peg, and facilitating withdrawals.

But Terra’s temporary pause appeared to have caused disruptions in other projects. DeFi platform Venus Protocol said an outdated price feed for LUNA, caused by the suspension, had possibly cost the protocol about $11.2 million. 

With more than five years of experience covering global financial markets, Ambar intends to leverage this knowledge towards the rapidly expanding world of crypto and DeFi. His interest lies chiefly in finding how geopolitical developments can impact crypto markets, and what that could mean for your bitcoin holdings. When he isn’t trawling through the web for the latest breaking news, you can find him playing videogames or watching Seinfeld reruns.
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