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LUNA, UST Issuer Terra Restarts Blockchain After Brief Shutdown
The price of LUNA fell too low to prevent governance attacks, Terraform Labs tweeted when it announced the network had been halted.
By Nikhilesh De
Updated May 11, 2023, 6:51 p.m. Published May 12, 2022, 4:29 p.m.
The Terra blockchain restarted around 1:45 p.m. ET Thursday after validators briefly halted the network to implement a patch that would prevent new actors from staking on it after the terra token (LUNA) fell to below 2 cents earlier in the day.
A block explorer confirmed the network had restarted after Terraform Labs, the company behind the Terra ecosystem, tweeted that the network had halted at block height 7603700. Terraform said the price of LUNA fell too low to "prevent governance attacks," citing LUNA inflation as one factor. By late Thursday, LUNA had fallen to less than 1 cent from nearly $120 in early April.
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The Terra ecosystem includes the LUNA governance token and several algorithmic stablecoins, including TerraUSD (UST).
The blockchain being halted meant no transactions with UST, LUNA or Terra's other cryptocurrencies could be processed. Token holders had to wait for the blockchain to restart.
Terraform said the network's validators "will coordinate" to restart the network shortly, once a patch to limit how many new parties could act as validators on the network was applied.
Validators are applying a patch to disable further delegations, and they will coordinate to restart the network in a few minutes. https://t.co/4gakxPLpLm
— Terra 🌍 Powered by LUNA 🌕 (@terra_money) May 12, 2022
LUNA's price plummeted by over $80 in three days. UST, one of the paired stablecoins, broke its peg to the U.S. dollar on Monday, dropping to 37 cents at press time. Terraform issued more than 1 billion LUNAs as circulating supply as part of an effort to reduce the selling pressure seen since Monday.
The UST stablecoin, which is supposed to maintain price parity with the U.S. dollar, lost its peg over the last weekend, but briefly recovered. It fell again on Monday, dropping to as low as 27 cents and has yet to recover its peg with the dollar.
The LUNA governance token, which is meant to act as a buffer keeping UST at $1, has lost value in conjunction, but didn't fall below UST until sometime between Wednesday and Thursday.
UPDATE (May 12, 2022, 16:40 UTC): Updated with additional context.
UPDATE (May 12, 2022, 18:07 UTC): Updated with confirmation that the Terra blockchain had restarted.
UPDATE (May 13, 2022, 00:48 UTC): Updated with LUNA price falling to less than 1 cent in second paragraph.)
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