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Tera Luna crash impact? Developers announce halt on new transactions

Tera Luna crash impact? Developers announce halt on new transactions

The development comes after cryptocurrency Terra Luna almost evaporated while witnessing its price hit lower and lower this past week.

(representational image) (representational image)

Terraform Labs, which says on LinkedIn it is based in Singapore and is a non-profit affiliate Luna Foundation Guard supporting the cryptocurrency Terra ecosystem, said that it would halt new activity on the stablecoin blockchain late Thursday night in an effort to avoid further damage.

“The Terra blockchain was officially halted at a block height of 7603700,” the tweet said. “Terra validators have decided to halt the Terra chain to prevent governance attacks following severe $LUNA inflation and a significantly reduced cost of attack," cited the verified Twitter account.

The development comes after cryptocurrency Terra Luna almost evaporated while witnessing its price hit lower and lower this past week. The token is currently trading 99.57 per cent lower at $0.01503, according to the CoinMarketCap data.

Terra Luna crashed amid the TerraUSD, the so-called stablecoin, de-pegging fiasco and has been falling into the abyss ever since.

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Stablecoins are digital tokens pegged to the value of traditional assets, such as the US dollar. They are popular in times of turmoil in crypto markets and are a common medium of exchange, often used by traders to move funds around and speculate on other cryptocurrencies.

Looking at the battered situation, Terra Luna's co-founder Do Kwon had on Wednesday said that it will be backed by reserves in future in an attempt to steady the cryptocurrency by adjusting its complex pegging mechanism.

Kwon, the co-founder of the company behind the token, Terraform Labs, announced a "recovery plan" in a series of tweets, saying the company would seek additional outside funding and "rebuild" TerraUSD so that it is collateralised. That means it would be backed by reserves rather than relying on an algorithm to maintain its 1:1 dollar peg.