Terra Blockchain takes up operation after stopping during UST crash

Terra Blockchain takes up operation after stopping for over 9 hours during the current UST crash. The breakdown of the blockchain ecosystem provoked its stablecoin UST to fall. It is happening from the moment when the cryptocurrency market dropped as the sell-off increased. 

For those who are not aware, the cryptocurrencies whose value does not drop and remain stable even in the crypto market sell-off cases are called stablecoins. There is an algorithm that is used to run the coins. The algorithm further equalizes the demand and supply of the coins. Moreover, stablecoins are non-volatile in nature which is why these are excellent to provide assistance in lending and borrowing.

The stoppage indicates one can not create new blocks on the blockchain network. Consequently, crypto owners were unable to move their Terra assets as far as the blockchain was unblocked.

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According to the tweet posted by the company,

“Terra validators have decided to halt the Terra chain to prevent governance attacks following severe $LUNA inflation and a significantly reduced cost of attack.”

Moreover, Terra blockchain demanded the crypto-miners or validators to disable IBC channels and on-chain swaps following the recovery of the blockchain. The blockchain organization further promoted users to link off-chain assets, including bETH, to their original chains.

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It is important to mention here that there are two coins in the Terra ecosystem. Terra and Luna. The Luna supply pool adds and subtracts from Terra’s supply in order to keep the value of Terra stable. Therefore, users burn Luna to mint Terra and even burn Terra to mint Luna, this is all done via an algorithmic module developed by the blockchain creators.

With regard to the above-mentioned, this is completely different from stablecoins such as USDC or USDT which are supported by fiat equivalents.

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At the same time, there were a few problems with the algorithm that resulted in users holding Luna suffering massive losses in the previous couple of days. It should be noted that UST is a stablecoin that is pegged 1:1 with USD.

As per the data issued by the Coinmarketcap, on May 11, the UST value declined massively to 0.225. And this huge price reduction indicates that what was supposed to be a stablecoin lost approximately 80 percent of its worth in a couple of days.

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