Tera LUNA Stops Validating Blockchain Following A 99 Percent Drop In Value

LUNA experienced a huge price drop and trading was forced to stop. (photo: twitter @@terra_money)

JAKARTA - The validators for the Terra blockchain, have decided to officially stop network activity on Thursday, May 12 in a move designed to prevent governance attacks following the severe devaluation of the LUNA token network.

The official Terraform Labs Twitter account confirmed that the blockchain network was halted at a block height of 7,603,700. The move follows a series of dramatic events that triggered the unprecedented price decline of LUNA and its associated stablecoin TerraUSD (UST).

The stablecoin, which is designed to maintain algorithmic parity with the United States dollar, lost its stake earlier this week before falling below $0.30.

With LUNA prices down by more than 99%, Terraform Labs no longer believes it can prevent governance attacks. In other words, the price drop “significantly reduces the attack [cost],” the ecosystem operator tweeted Thursday, May 12.

However, the downtime in block production did not last long, as Terra later announced that it would restart the network after the validator applied a patch to further disable delegation. “The network should go live after 2/3 of the online voting power,” they said, as quoted by Cointelegraph.

As Cointelegraph reported, the LUNA/USDT contract was removed from the listing on Binance on Thursday after the pair traded below 0.005 USDT. It follows the removal of the LUNA token by cryptocurrency exchange Huobi earlier in the day.

Earlier this week, Terraform Labs co-founder Do Kwon shared details on a recovery plan that will help save UST from further devaluation. Terra's official Twitter account further elaborated on the plan on Thursday by devising a strategy to burn USD 1.4 billion UST and stake 240 million LUNA. However, details of the rescue plan failed to deter the market's selling pressure.

Prior to this week's events unfolding, Terra LUNA was a top 10 cryptocurrency project by market cap, and its UST asset was the third-largest stablecoin behind only Tether (USDT) and USD Coin (USDC).