The LUNA and Terra USD network has been paralyzed

The LUNA and Terra USD network has been paralyzed

Key facts:
  • Terra’s cryptocurrencies are still listed on some centralized exchanges.

  • The decision was made after a massive LUNA broadcast, in order to prevent governance attacks.

The Terra network, where the terra (LUNA) and terra USD (UST) cryptocurrencies are processed, was paralyzed minutes ago, at the height of block 7,603,700.

The incident occurred, as reported by Terra from its official channels, after a decision of the validators of the network in order to prevent governance attacks.

This happens after, as reported by Criptonews this morning, holders of UST massively burned (destroyed) their coins, with the consequent issuance of LUNA. To understand this, it must be borne in mind that for every MOON that burns, an equivalent amount of MOON is emitted.

Luna is the governance currency of Terra and is considered to be, if the blockchain had not been paralyzed, attacks on the protocol could have occurred, as its possession grants voting power in decisions about the network.

Although no movements of the tokens of that network can be made on the blockchain, both cryptocurrencies continue to trade on some centralized exchanges. At the time of publication of this article, the price of UST (thought of as a stablecoin) is $0.36 and the price of LUNA is $0.016.

market quote
UST, which is intended to be a stablecoin, lost parity with the US dollar and its price continues to fall. Source: CoinMarketCap.

According to Terra, the validators are applying a patch with the aim of disabling delegations (that is, that addresses that are not validators can vote or make proposals). Validators “will coordinate to restart the network in a few minutes”, add the Twitter post.

Update 05/12/2022 05:41 PM (UTC): Terra inform that the patch was released. The network will come into operation again when two-thirds of the computing power is online.

Update 05/12/2022 07:00 PM (UTC): The Terra Network processes transactions again, but only validators have voting power.