They evaluate measures to rearm the organizational and economic structure of Terra.
Yesterday, the network was paused to prevent a governance attack.
This Friday, May 13, at 2 AM (UTC time), the Terra network was paused for the second time in 24 hours. The objective of its developers with this measure is to restructure the network, and one of the possibilities is to return it to its “pre-attack” state, without the intervention of the Luna Foundation and with its stablecoin, terra USD (UST), with collaterals that the support.
Terra’s detention in block 7607789 was informed by the official Twitter account of the network. This situation had been experienced a few hours before, when she was arrested for the first time, as reported by CriptoNoticias.
With yesterday’s network shutdown, developers they introduced a patch that prevents new addresses that are not validators from being able to exercise their vote. This removes the option to delegate it to third parties as was done in the past. The move was intended to prevent governance attacks.
In addition, the Terra account retweeted a message from William Chen, director of developer relations for the Luna Foundation. This developer explained in his post that the community is deciding what to do with Terra.
The possibilities on the table, according to Chen, include restoring the network to its state prior to the “attack” that it would have suffered according to its developers. This is the main theory used by the creators of the network to justify the collapse that began last Monday, May 9.
On the other hand, other measures that are being evaluated also entail the elimination of the Luna Foundation (LFG), in charge of ensuring the operation of UST and terra (LUNA), the cryptocurrency that is burned for the issuance of the stablecoin. Regarding UST, precisely, there is a proposal from developer Do Kwon that suggests a full collateralization model for the stablecoin.. This implies the existence of another underlying asset to back its issue, and differs from the algorithmic method it currently uses to maintain parity with the US dollar (or at least to try).
Finally, Chen stated that they are going to “deliberate new mechanisms for LUNA.” The developer closed his post by saying that they will need to “save the remaining value in the ecosystem and community and rebuild the right way.”
Bad news continues for Terra
While emergency and desperate decisions are being made in the Terra community, the cryptocurrency ecosystem continues to react to the week of terror that had its UST and LUNA crypto assets and its decentralized finance (DeFi) protocols, which had a capital flight of more than USD 25,000 million. Anchor is the most recognized and used among these DeFi protocols.
One of the alternatives to “save” the stablecoin UST is to remove a part of its currency (10%) to reduce the supply and thus raise its price. At the time of writing this note, UST is trading at USD 0.16. Such value is 84% of its ideal price, which is one US dollar.
Some exchanges, such as Binance, ByBit and BitMex, decided to delist the two crypto assets from Terra. However, these were still available on some decentralized exchanges until the network was shut down.
As this whole debacle unfolded, other crypto assets such as bitcoin (BTC) and even a stablecoin such as tether (USDT) have also suffered the consequences of the losses caused by Terra. Also, many people have reported suffering huge losses after the capital they had invested in UST and LUNA disappeared in just a matter of days.