Terraform Labs, the company behind the UST and Terra (LUNA) cryptocurrencies, stopped the Terra blockchain Thursday following the collapse of the Terra ecosystem this week, causing its TerraUSD (UST) stablecoin token to crash, taking the rest of the cryptocurrency market with it.
The stop means that no new blocks are generated on the blockchain network after its block height of 7603700and holders cannot move their Terra assets until the blockchain is thawed.
“Terra validators have decided to shut down the Terra chain to prevent governance attacks after severe $LUNA inflation and significantly lower attack costs,” the company tweeted.
The move comes after Terra’s not-so-stable coin TerraUSD (UST) broke away from the $1 level and plunged more than 99% earlier this week.
The company too said that delegations will be shut down once block production resumes, and that the network should go live again as soon as two-thirds of the votes come online.
Do Kwon, the founder behind both cryptocurrencies, unveiled a plan yesterday in hopes of resolving the situation. “Before all else, the only way forward is to absorb the stablecoin supply that wants to stop before $UST can begin to recover,” Kwon wrote in a statement. thread of tweets† “There’s no way around it.”
Kwon scheduled on approval a Terra community proposal that would increase the amount of LUNA that can be minted by four times, allowing holders to “absorb the UST faster” or sell because only a certain amount of UST can be sold per day.
But by increasing coin capacity, the price of LUNA could fall even more; indeed, it has dropped significantly since yesterday.
As it stands, there were approximately 352,345,072 votes (based on the number of LUNA tokens, not per user) in favor of the proposal and zero votes against. The number of votes rose by 270% on Wednesday from 95,20,000 votes. It is unclear whether Kwon will continue to support the proposal after Terra shuts down the blockchain today.
“For the uninitiated, when a cryptocurrency collapses and becomes incredibly cheap and more minted, anyone can gain majority control of the network,” Zack Guzmán, a former crypto reporter at Yahoo Finance, said in a statement. tweet† “Of course that wouldn’t be good, because a bad actor can do everything he wants with it. Quitting is the last option.”
In the past few days, LUNA is down more than 99% to $0.01479 while UST is down 62.7% to $0.37 of its $1 peg, according to CoinMarketCap.