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Terra blockchain halted again as crypto Luna crashes

By Livemint
The Luna token has sunk to virtually zero, compared with its all-time high of $119.51

Terra (UST) powered by Luna said in a tweet from its verified account that validators, the entities responsible for verifying transactions on the blockchain, took the step to “come up with a plan to reconstitute" the Terra network.

The blockchain’s validators earlier stopped and then restarted transactions, the crypto equivalent of turning a computer off and then on again, in order to implement a software update designed to help avoid attacks on the network.

TerraUSD was one of the largest and most closely-watched algorithmic stablecoins before its intended 1-1 peg to the dollar disintegrated this week. The unraveling sent shockwaves through crypto, triggering deep losses before sentiment stabilized. UST or terraUSD, which is an algorithmic stablecoin, is a sister token of Luna.

The Terra (Luna) token has sunk to virtually zero, compared with its all-time high of $119.51. Luna’s downfall started over the weekend when its sister token UST, which is a stablecoin, de-pegged from its $1 value after big investors started dumping millions of dollars’ worth of UST over the weekend.

A stablecoin is usually linked to an underlying asset such as the US dollar or a precious metal such as gold. TerraUSD is a decentralised algorithmic stablecoin, meaning rather than being backed by an asset, UST uses complex codes to create new coins or destroy old ones to maintain a steady price at $1.

The relationship between UST and Luna was central to attempts to maintain the former’s $1 peg. Traders could swap a unit of the stablecoin, whether it was trading at, below, or above $1, for one unit of Luna, and vice versa. The effect of unloading UST at prevailing prices was to dramatically increase the supply of Luna, further depressing the price of that token.

(With inputs from agencies)

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Dive Deeper:
Terra 'Officially' Halts Blockchain As LUNA Hits Zero
Terra (CRYPTO: LUNA) has officially stopped block production as the blockchain’s native token hit a low of $0.000033 on Thursday.
CoinSwitch Kuber delists Luna just as crypto exchanges suspend Terra tokens. See details
‘We have now decided to delist Luna to safeguard your interests and those of the larger crypto ecosystem,’ CoinSwitch Kuber…
Terra briefly halts blockchain amid stablecoin uproar
investors are challenging the presumed 1-to-1 pegs that underpin stablecoins.
'Evil genius' may have caused Terra and Luna cryptocurrencies to crash in a 'death spiral'
The devastating effects of the crash of crypto "stablecoins" Terra and Luna are being felt by many but their crash…
One subscription that gives you access to news from hundreds of sites
Terra (LUNA) Sees $106M In Liquidations With 97% Crash As UST Collapses To Below 40 Cents
Terra (CRYPTO: LUNA) and its native stablecoin TerraUSD (CRYPTO: UST) brought each other down in a cryptocurrency market catastrophe that would not be…
5 Top Investors Who Lost Millions From The Terra Luna Crash
TerraUSD (CRYPTO: UST) billed itself as the gold standard of algorithmic stablecoins, but the once-"stable" coin lost its peg over the…
Get all your news in one place