Terra ecosystem and its associated LUNA and UST have been experiencing chaotic moments on an unprecedented level in recent days. Anyone who has even a little bit of a close eye on the crypto world, including investors, traders, founders, and developers, is in for a surprise. As Terra executives continue to operate to salvage the situation, the problem does not seem close to being resolved.
About 10 hours ago, Terra’s blockchain was halted at block height 7603700. The validators have decided to shut down the network to prevent their attack on the governance token after the severe LUNA devaluation. Shortly after that, the validators released a patch and the Terra blockchain started producing blocks again. However, this stop did nothing, and very soon the network was shut down again.
A few hours ago, the Terra blockchain announced that it was officially stopped for the second time at block 7607780. Terraform Labs stated that the validators did this to “make a plan to restructure.”
The Terra blockchain has officially halted at block 7607789.
Terra Validators have halted the network to come up with a plan to reconstitute it.
More updates to come.
— Terra (UST) 🌍 Powered by LUNA 🌕 (@terra_money) May 13, 2022
Terra LUNA’s Status
LUNAThe supply of ‘s has been increasing quite rapidly lately. At this time yesterday, more than 1.46 billion tokens were in circulation. However, by the early hours of Friday, the number had already reached 6.5 trillion. Meanwhile, the token has lost more than 99% of its value and was only worth $0.008824 at press time.
The total supply of LUNA is now over 6.5 trillion. This token is worthless, and will be for the rest of time.
— CryptoWhale (@CryptoWhale) May 13, 2022
But not all improvements have been revealed in price. The world’s leading crypto exchange Binance has removed LUNA transactions and will not allow trading in any pair for now. On the UST side, single parity is BUST and TOP was left as
Users can still trade the LUNA on other trading pairs that are available on Binance：LUNABUSD LUNAUST.
— Wu Blockchain (@WuBlockchain) May 13, 2022
Did the Crash Say I’m Coming?
The Terra ecosystem has come under frequent criticism since joining the game, and there has been a lot of discussion, especially about founder Do Kwon. Despite the declines, the community supported the burning and printing mechanism and were happy with the rise in a short time. The situation had progressed so much that many people in the community were even making comparisons that the price of LUNA would be in a deflationary structure like Ethereum and would follow ETH.
Of course, no one asked a question about the high profits in a short time. Although the investors were quite happy with this situation, the end of the story went out like a fire. Arthur Hayes summarized his views on the subject with these words:
“The protocol is working as it should, the fact that people are surprised by what happened means they didn’t read the whitepaper properly.” In addition to this explanation, he continued, “Terra is currently in the deepest, darkest depths of the death spiral.”
According to Hayes, this spiral would end when the UST market cap equaled that of LUNA. If left to do its own thing, the protocol will eventually find this market value equilibrium. In such a scenario, what would the market cap be at final rest? And most importantly, when a fresh LUNA is created by arbitrageurs who bought cheap UST, who will buy that LUNA?
“Why buy LUNA from sellers when you know there is billions of dollars of programmatically generated LUNA selling pressure as long as the UST is worth less than $1?”
Is It All Over for LUNA?
Concepts like the ‘cross of death’ have always been the subject of debate among people in the crypto space. At this point, however, it seems certain that LUNA has literally been crucified and is on the verge of death. Could LUNA even be dead already?
— Nebraskangooner (@Nebraskangooner) May 13, 2022
Joking aside, in an environment where people are taking serious losses and the cryptocurrency markets are seriously hurting, serious changes really need to be made for the UST to survive. Even if these changes do occur, it may be a little utopian to expect their effects to happen quickly, but given the volatile nature of the markets, anything is possible.
Disclaimer: What is written here is not investment advice. Cryptocurrency investments are high-risk investments. Every investment decision is under the individual’s own responsibility. Finally, Koinfinans and the author of this content cannot be held responsible for personal investment decisions.