The Terra blockchain has officially stopped mining at block 7607789.
As per a recent tweet, Terra Validators have halted the network to come up with a plan to reconstitute the blockchain.
The price of Terra Luna has nearly wiped out following a precipitous decline this week. The cryptocurrency tanked to 99.9 per cent levels a couple of hours ago and is currently trading at 98.5 per cent down as per data from CoinMarketCap at 8:30 am IST on Friday.
Why did Luna crash?
The cryptocurrency fell more than 99 per cent during early hours of Friday as a result of the UST (Terra USD) algorithmic stablecoin de-pegging debacle.
But how are Terra Luna and UST linked?
The Terra ecosystem's survival is dependent on the adoption of UST as a stablecoin; thus, LUNA and UST are inextricably linked. LUNA invests in UST and loses money as the demand for UST increases. Long-term LUNA supply may become highly deflationary with improvements such as Columbus-5. Alternatively, if UST is judged unstable, the value of LUNA may fall. As a result of the Wormhole hack, UST lost its peg, temporarily lowering the value of LUNA.
What caused UST to de-peg?
The US dollar was devalued on May 9, 2022, falling from $1 to $0.68. At the time of writing, it was unclear whether UST will resume its peg. When UST began trading significantly below its dollar peg, users began exchanging UST for competing stablecoins, leading the UST Curve pool to gradually dwindle. The price of LUNA, the collateral for UST, fell as a result of short selling. Terra was forced to mint more LUNA in order to alleviate the negative price pressure.
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