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.

AccessTimeIconMay 12, 2022 at 4:29 p.m. UTC
Updated May 13, 2022 at 12:48 a.m. UTC

Nikhilesh De is CoinDesk's managing editor for global policy and regulation. He owns marginal amounts of bitcoin and ether.

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.

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.

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.)



Read more about

DISCLOSURE

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.

CoinDesk - Unknown

Nikhilesh De is CoinDesk's managing editor for global policy and regulation. He owns marginal amounts of bitcoin and ether.

CoinDesk - Unknown

Nikhilesh De is CoinDesk's managing editor for global policy and regulation. He owns marginal amounts of bitcoin and ether.

Investing in the Future of the Digital Economy
October 18-19 | Spring Studio, NYC