The blockchain behind the destroyed TerraUSD stablecoin and affiliated Luna token has stopped processing new transactions for the second time in less than a day.
Terraform Labs said on Twitter from its verified account that the validators, the people responsible for verifying transactions in the blockchain, had taken a step to “come up with a recovery plan” for the Terra network.
“The quorum among validators is trying to shut down the network to avoid the DECIMAL crisis due to the exponential depreciation of LUNA,” reads one message on the Terra Validators Discord server that Bloomberg saw before terminating the transaction.
According to Bloomberg, TerraUSD, also known as UST, as of 12:11 in Singapore was trading for just 11 US cents. The Luna token also fell to near zero from an all-time high of $ 119.51.
The total volume of Luna tokens in circulation rose from 1.46 billion yesterday to more than 6.5 trillion, according to CoinMarketCap.
The relationship between UST and Luna has been central to attempts to keep the former pegged to $ 1. Traders could exchange a unit of stablecoin, regardless of whether it is trading at a price below or above $ 1, for one unit of the Moon, and vice versa. The effect of unloading UST at preferred prices was a sharp increase in Luna’s supply, which further reduced the price of this token.
The UST was one of the largest and most careful algorithmic stablecoins before its alleged peg of 1-1 against the dollar disintegrated this week. The unraveling caused shock waves in the crypt, causing deep losses before the mood stabilized.
Blockchain validators previously stopped and then restarted transactions, the crypto-equivalent of shutting down and turning on a computer, to implement a software update designed to avoid attacks on the network.
Extensive cryptocurrencies seemed to be brushing aside the events. Bitcoin rose 7.5% to $ 30,674 and ether rose 9.3%.
© 2022 Bloomberg