It has become known that Terra has halted the blockchain for the second time in 24 hours.
UST and LUNA developer Terra has resumed its blockchain production after an earlier halt that lasted two hours on Thursday but later announced that it has halted again. Terra effected the blockchain halt to preempt any possible hacks amid the UST crash earlier this week. After the controversial stablecoin plunged 75% below the dollar on Wednesday, Terra validators opted for the network halt to “prevent governance attacks.”
LUNA has also experienced a price collapse of more than 99% within the past week.
Insight into Terra Blockchain Halt
The argument made for the price collapse of UST and LUNA was that a whale buyer could take advantage of the low costs for control. The halt froze the blockchain at 7,603,700, effectively rendering any native transactions on Terra’s blockchain impossible. Further speaking on the governance attack threat, Zack Guzmán, a former crypto reporter at Yahoo Finance, tweeted:
“For the uninitiated, when a cryptocurrency collapses and becomes incredibly cheap and more is being minted, anyone can just scoop up majority control of the network. That would obviously not be good as a bad actor could do anything they want with it. Halting is a last option.”
Furthermore, Terra validators also announced a patch upgrade to the network while it was inoperative. This reinforced the security surrounding the blockchain, further rendering it attack-proof. A tweet from Terra’s official handle read:
“Validators are applying a patch to disable further delegations, and they will coordinate to restart the network in a few minutes.”
About an hour and a half later, the development team tweeted that the network had resumed block production. However, the blockchain team was also quick to add that network staking was disabled.
“The Terra blockchain has resumed block production. Delegations are disabled now that the chain is live with the new code merge. Validators, please check the Discord announcements for the latest patch notes,” read the Twitter statement.
But later the company made another post.
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
Rescue Plan for UST & LUNA
Following the UST and LUNA crash, Terra founder Do Kwon revealed a rescue plan yesterday. Taking the form of a community proposal, the plan suggested increasing LUNA’s total daily minting capacity by four-fold.
“Before anything else, the only path forward will be to absorb the stablecoin supply that wants to exit before $UST can start to repeg, there is no way around it,” Kwon explained in a Twitter thread, further expounding on the given prescription.
Currently, there are 352,345,072 votes in favor of the proposal, with no votes against it. The votes in favor are not per user, but rather the number of LUNA tokens. Furthermore, the current number is a 270% increase from 95,200,000 votes on Wednesday.
Going forward, Kwon also stated that Terra would adjust its mechanism to see UST have collateral backing. Such backing would include other financial assets, both traditional and crypto. Consequently, UST would become more in line with other stablecoins, such as USDC, which currently have collateralized assets.
Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to demystify crypto stories to the bare basics so that anyone anywhere can understand without too much background knowledge.
When he’s not neck-deep in crypto stories, Tolu enjoys music, loves to sing and is an avid movie lover.
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