On Friday, the Terra blockchain was suspended for the second time in 12 hours, as developers sought additional time to devise a recovery strategy.
The move comes as LUNA, the stablecoin’s native token, has dropped below $1, and the UST stablecoin’s dollar “peg” has dropped below $0.2.
Terra had paused the blockchain for almost two hours late on Thursday. Given the roughly 100% drop in LUNA prices, the developers said it was to prevent governance attacks. Because of the price decline, the blockchain is especially susceptible to price manipulation.
Validators have suspended the network to buy additional time to rebuild it, Terra’s developers wrote in a tweet.
At roughly 10:20 p.m. ET, the blockchain was officially paused at block 7607789.
The network has been down for about three hours as of press time, with no more updates from the devs. Improved network capacity to manage larger transaction volumes, as well as additional efforts to support the UST peg, could be part of the restitution measures.
Terra’s first closure sent shockwaves through the market, exposing other platforms to LUNA swap price manipulation.
Due to the stoppage, and a similar price feed pause by Chainlink, users on Venus Protocol were able to sell LUNA for more than 100 times its market price. According to a different study, the treatment cost $11.2 million.
LUNA and UST prices have continued their downward spiral, despite Terra’s efforts to restore value. To boost UST prices, the project plans to coin more LUNA and burn it.
What’s next for the project?
Massive withdrawals on the Terra blockchain have nearly depleted its value, making any attempts to recover nearly impossible.
There are also concerns that Do Kwon, the project’s founder, and the project’s sponsors could face harsh regulatory action, though no official word has been issued on the subject.
Because their volatility was affecting the exchange’s networks, prominent crypto exchange Binance delisted LUNA and UST amid the market pandemonium.