Terra blockchain halted as crypto TANKS 99.99%; Is this against decentralisation? 

The Terra blockchain has once again been officially halted. The sequence of blocks had reached block 7607789 post which mining had been stopped. 

Terra Validators have, according to a recent tweet, halted the network in order to design a strategy for rebuilding the blockchain after the token crashed by over 99 per cent. 

Terra Luna's price has nearly wiped out after crashing this week. According to CoinMarketCap, the cryptocurrency dropped below 99 per cent levels just a few hours ago and is now trading at 98.5 percent down as of Friday at 8:30 a.m. IST. 

Is halting the blockchain against decentralisation? 

Sharat Chandra, crypto expert and vice president, research and strategy at EarthID told Business Today, “It's unfortunate that new-age blockchains have deviated from the first principles of decentralization and have let tokenomics decide the fate of the protocol.” 

He further added, “ Enhancing the minting supply of UST token hasn't helped. Terra blockchain faces an existential crisis, and halting the blockchain will not help their cause of restoring the peg.” 

Chandra concluded by saying “Blockchains will be tested at the altar of scalability, decentralization and security, and those who can balance this trilemma effortlessly will be able to sustain themselves in the long run.”  

What caused Luna's crash? 

The UST (Terra USD) algorithmic stablecoin de-pegging catastrophe sent the cryptocurrency down more than 99 per cent in the early hours of Friday. 

What is the connection between Terra Luna and UST? 

The adoption of UST as a stablecoin is critical to the Terra ecosystem's sustainability; consequently, LUNA and UST are intricately intertwined. LUNA makes an investment in UST and loses money as the demand for UST grows. If UST is deemed unstable, the value of LUNA could plummet.  

What led to UST's de-peg? 

On May 9, 2022, the US dollar was devalued, falling from $1 to $0.68.  

Users began swapping UST for competing stablecoins when UST began trading significantly below its dollar peg, causing the UST Curve pool to progressively deplete. Short selling caused the price of LUNA, the UST collateral, to fall. In order to relieve the negative price pressure, Terra was compelled to mint extra LUNA. 

Also Read: Terra blockchain halted again as crypto TANKS 99.99%  
Also Read: Cryptocurrency markets crash: Terra Luna down 99.99%, will it wipeout?