- The chain stop prevents further on-chain transactions
- Exchanges have started shutting down LUNA trading
Contested cryptocurrency LUNA plummeted under a penny on Thursday as the Terra protocol continued to mint new units to meet redemption demand for its volatile UST stablecoin, which is far from its intended one-for-one peg to the US dollar is removed.
As supply increased, the percentage of LUNA staked with validators shrank, creating a new risk: a governance attack.
In order for the entire chain – and all of its assets – to be safe, at least a third of the LUNA must be staked to honest auditors processing transactions.
There is still 2.4 billion UST tied up in the anchor protocol and about $279 million in other staking assets, mostly bonded ether. If two-thirds of LUNA were bought up cheaply and pinned to malicious auditors, all of those assets could be at risk — and it would only cost LUNA a few million dollars to handle chain validation.
Therefore, the validator community chose to simply bring the chain’s block production to a coordinated stop in order to execute it an emergency upgrade this disables LUNA delegation.
According to the official Twitter account, the network will then be restarted.
LUNA supply jumped to about 40 billion from 1 billion a week ago when the chain was halted, the result of the protocol’s incessant effort to restore the ill-fated UST tie.
In the meantime a governance proposal The company put to the vote on Thursday is looking to burn around 1 billion UST currently held in a community pool smart contract, plus another 371 million UST provided as cross-chain incentives on Ethereum, causing the UST oversupply is reduced by about 11%.
This is a groundbreaking story. It will be updated.
Post Terra Community stops LUNA Chain To Protect What’s Left is not financial advice.
Source: Crypto News Austria