Terra validators have reportedly decided to freeze Terra’s blockchain due to LUNA’s collapsing market price. The team argues that at such low costs, a whale buyer could easily commit a governance attack on the network.
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- The chain was officially frozen at block 7,603,700, making native transactions on Terra’s blockchain impossible.
- Terra (LUNA), which has seen a price collapse of over 99% within the past week, also serves as the protocol’s governance token.
- Governance tokens let holders submit and vote upon the governance proposals related to upgrading a blockchain protocol.
- However, if one gains control of over 50% of a governance token’s supply, he could theoretically alter the protocol in a malicious way. Fortress protocol was struck by such an attack last week when a hacker effectively bought out its governance for under $20,000.
- Today, LUNA has a circulating supply of roughly 3.45 billion. Trading at only a penny, half of the supply would cost just a few hundred million dollars shared between a few wealthy collaborators.
- Terra’s collapse is largely due to the destabilization of UST’s peg to the dollar, which led to conversions of UST for LUNA en masse.
- The coin’s price is now less than it was during its ICO, meaning early investors are now underwater if they held their positions.
- Amid broader stablecoin panic, even Tether began to lose its peg earlier today, though not to the same degree as UST.
