Blockchain validators for the Terra blockchain have decided to officially halt network activity on Thursday in a move designed to prevent governance attacks following the severe devaluation of the network’s LUNA token.
Blockchain validators are individuals who maintain the blockchain’s integrity by constantly contributing computing power to the linkage from the first block to the last. There is generally an abbreviated version of the blockchain for this purpose that is much smaller than the full chain, which contains every transaction.
Terraform Labs’ official Twitter handle confirmed that the blockchain network was halted at a block height of 7,607,789. This is the second time in less than 24 hours the validators halted the network. The first one was done at a block height of 7,603,700.
What you should know
- The move follows a series of dramatic events that triggered an unprecedented decline in the price of LUNA and its associated TerraUSD (UST) stablecoin.
- The stablecoin, which was designed to maintain algorithmic parity with the United States dollar, lost its peg earlier this week and is now trading $0.18 as of the time of this writing.
- The validators made this decision because of LUNA’s price collapsing more than 99%. They explained that Terraform Labs is no longer confident that it can prevent governance attacks.
- In other words, the price decline “significantly reduced [the] cost of attack,” the ecosystem operator tweeted Thursday.
- Earlier this week, Terraform Labs co-founder Do Kwon shared details about a recovery plan that would help save the UST peg from further devaluation.
- Terra’s official Twitter handle further elaborated on those plans on Thursday by laying out a strategy to burn $1.4 billion UST and stake 240 million LUNA.
- However, the details of the rescue plan have failed to stop the bleeding as the market selling pressure continued. This saw LUNA to trade at a price with the same decimals as Shiba Inu, the memecoin currently ranked #14 by market capitalization.
Before the capitulation we saw during the week, LUNA was a top 10 cryptocurrency project by market capitalization, ahead of notable players like ADA and XRP. Its UST stablecoin was the third-largest stablecoin behind only Tether (USDT) and USD Coin (USDC).
