Macauley Peterson

<div id="highlights-block_627d41b0eb302" class="highlights">
 <ul>
 <li>The project was offline for 10 hours but has resumed again</li>
 <li>Total market cap of LUNA dropped from more than $27 billion to effectively zero in just one week</li>
 </ul>
 
</div>



Mere hours after <a href="https://cms.blockworks.co/terra-community-halts-luna-chain-to-protect-whats-left/" target="_blank" rel="noreferrer noopener">halting and then restarting</a> the Terra blockchain, validators appeared to have thrown in the towel, deciding for a second halt. But after approximately 10 hours offline, the chain <a href="https://twitter.com/terra_money/status/1525095111389945857" target="_blank" rel="noreferrer noopener">has now been restarted</a>, with a focus on bridging non-native Anchor assets back to their native chains.



Major exchanges late Thursday and into Friday opted to delist the LUNA token, a move that signals the end of the project in its current form.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">The Terra blockchain has resumed block production. Validators have decided to disable on-chain swaps, and IBC channels are now closed. Users are encouraged to bridge off-chain assets, such as bETH, to their native chains. Note: Wormhole bridge is currently unavailable.&mdash; Terra (UST) 🌍 Powered by LUNA 🌕 (@terra_money) <a href="https://twitter.com/terra_money/status/1525095111389945857?ref_src=twsrc%5Etfw">May 13, 2022</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Earlier Thursday, the community acted to protect assets from a malicious governance attack, including the bonded ether, AVAX, ATOM and SOL locked in the Anchor Protocol, which retain their value. In light of the chain halt, the Anchor team <a href="https://twitter.com/anchor_protocol/status/1524942697500385285" target="_blank" rel="noreferrer noopener">asked users</a> via its official Twitter account to “stay tuned for future updates.”



Lido Finance, which worked with Terra to wrap the non-native assets, has <a href="https://twitter.com/LidoOnTerra/status/1525115693342990336" target="_blank" rel="noreferrer noopener">issued instructions</a> for users to bridge bETH back to Ethereum, and bSOL over the Wormhole bridge back to Solana, which is now available.



Coinbase will soon suspend trading on LUNA. The Kraken exchange has <a href="https://status.kraken.com/incidents/5438ztr8g7pf" target="_blank" rel="noreferrer noopener">suspended</a> deposits and withdrawals.



The position of Binance is unclear. The exchange had signalled an end to trading of Luna with Binance CEO Changpeng “CZ” Zhao explaining the decision was in part because of a lack of understanding among users of LUNA’s supply expansion.



“Some of our users, unaware of the large amounts of newly minted LUNA outside the exchange, started to buy LUNA again, without understanding that as soon as deposits are allowed, the price will likely crash further,” Zhao said in <a href="https://twitter.com/cz_binance/status/1525060772543578113?s=20&amp;t=50NWTl_Xzhl2BOvxpr7pUw" target="_blank" rel="noreferrer noopener">a Twitter thread</a>. “Due to these significant risks, we suspended trading.”



In a now-futile effort to restore the UST one-to-one peg to the US dollar, the Terra protocol is designed to mint LUNA continuously, and the current circulating supply has exceeded 6.5 trillion — up from an original supply of one billion. That has spurred the price collapse to well below one thousandth of a cent.



<div class="wp-block-image"><figure class="aligncenter"><img decoding="async" src="https://lh5.googleusercontent.com/rGKiVpIFgZdRy7wer58JXEVLQjTOCQj_TZAMs1LHFOQ2s0LlEDP04eA4OPLuTU2rpiCKM8KhhHZGqMPdl8mFPfA4Ek1o_4uDkj3scHCz-Ud4qFU3pdI_IgMsPxiGZZVOf69F_5inscEFf90VFw" alt=""/><figcaption>Source: <a href="https://terradash.vercel.app/" target="_blank" rel="noreferrer noopener">terradash.vercel.app</a></figcaption></figure></div>



But Binance&#8217;s official Twitter account announced a resumption of trading on the LUNA/BUSD and UST/BUSD trading pair at 10:00 am ET, then 20 minutes later <a href="https://twitter.com/binance/status/1525118008900964352" target="_blank" rel="noreferrer noopener">posted an update</a> that the trading resumption was &#8220;delayed,&#8221; only to <a href="https://twitter.com/binance/status/1525120867587457027?s=20&amp;t=IPwyW4St0sOv1mn4exngwQ" target="_blank" rel="noreferrer noopener">re-announce</a> minutes later that trading would resume at 10:30 am ET.



Coinbase <a href="https://twitter.com/coinbaseexch/status/1524928750848122880" target="_blank" rel="noreferrer noopener">initially</a> moved to facilitate further trading by creating a more precise quote tick of 0.00000001 on all WLUNA pairs. Coinbase only ever offered trading on wrapped LUNA and Ethereum token representation of the native Terra asset. But just 11 hours later, they, too, <a href="https://twitter.com/CoinbaseAssets/status/1525083666149433349" target="_blank" rel="noreferrer noopener">announced</a> a total end to WLUNA trading, effective noon ET, citing “recent volatility involving Terra ecosystem assets.”



Just a week ago, the total market cap of LUNA and UST alone stood at north of $45 billion. Today, it is about $1.7 billion, as UST trades for around 12 cents and stakeholders assess various options for <a href="https://cms.blockworks.co/what-comes-next-for-terra-ecosystem/" target="_blank" rel="noreferrer noopener">what might come next</a>.



This story was updated on May 13, 2022, at 12:30 pm, 12:10 pm, 11:59 am and 11:32 am ET.



<hr class="wp-block-separator">
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<hr class="wp-block-separator">

Terra Halted Again, Exchanges Send Mixed Signals on Trading

<div id="highlights-block_627d41b0eb302" class="highlights">
 <ul>
 <li>The chain halt prevents any further on-chain transactions</li>
 <li>Exchanges have begun turning off LUNA futures trading</li>
 </ul>
 
</div>



The embattled cryptocurrency LUNA plummeted below a penny Thursday, as the Terra protocol continued to mint new units to meet redemption demand for its flailing UST stablecoin, which remains far from its intended one-to-one US dollar peg.



As the supply expands, the percentage of LUNA staked with validators shrunk, which created a new risk: a governance attack.



For the entire chain — and all its assets — to be secure, at least a third of the LUNA must be staked to honest validators that are processing transactions.&nbsp;



There are still 2.4 billion UST locked on the Anchor protocol and about $279 million in other staked assets, mostly bonded ether. If two-thirds of the LUNA were to be bought up on the cheap and staked to malicious validators, all those assets could be at risk — and it would take just a few million dollars’ worth of LUNA to take over the chain validation.



Therefore, the validator community opted to simply bring the chain’s block production to a coordinated halt, so as to execute <a href="https://twitter.com/terra_money/status/1524790163846864896" target="_blank" rel="noreferrer noopener">an emergency upgrade</a> that disables LUNA delegation.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">The Terra blockchain was officially halted at a block height of 7603700.<a href="https://t.co/squ5MZ5VDK">https://t.co/squ5MZ5VDK</a> Terra validators have decided to halt the Terra chain to prevent governance attacks following severe <a href="https://twitter.com/search?q=%24LUNA&amp;src=ctag&amp;ref_src=twsrc%5Etfw">$LUNA</a> inflation and a significantly reduced cost of attack.&mdash; Terra (UST) 🌍 Powered by LUNA 🌕 (@terra_money) <a href="https://twitter.com/terra_money/status/1524785058296778752?ref_src=twsrc%5Etfw">May 12, 2022</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



According to the official Twitter account, the network was restarted after about two hours offline.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">The Terra blockchain has resumed block production. Delegations are disabled now that the chain is live with the new code merge. Validators, please check the Discord announcements for the latest patch notes. <a href="https://t.co/CGQgfMDWQe">https://t.co/CGQgfMDWQe</a>&mdash; Terra (UST) 🌍 Powered by LUNA 🌕 (@terra_money) <a href="https://twitter.com/terra_money/status/1524812171179327488?ref_src=twsrc%5Etfw">May 12, 2022</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



The LUNA supply expanded from 1 billion a week ago, to some 40 billion by the time the chain was halted, the consequence of the protocol’s unceasing effort to restore the hapless UST peg.



<div class="wp-block-image"><figure class="aligncenter"><img decoding="async" src="https://lh6.googleusercontent.com/CkuVSKUIGfGfXZeD-9Wf-BWlF5Ocnq-3zPlpp0MeQm31nVmlsp9UcCc8cuMkQCfcFRD5gm2iT73QRJRzptUvQkuPWaNXnxDw6aI9SYqEjip8KuZJ_TaUscCcmKkMBylEGZVI99N3RDBma_t4-g" alt=""/><figcaption>Source:&nbsp;<a href="http://terra.smartstake.io/history" target="_blank" rel="noreferrer noopener">smartstake.io</a></figcaption></figure></div>



Meanwhile, a <a href="https://agora.terra.money/t/burn-the-remaining-ust-in-the-community-pool-cross-chain-liquidity-incentive-ust/6837" target="_blank" rel="noreferrer noopener">governance proposal</a> put up for a vote Thursday seeks to burn around 1 billion UST currently held in a community pool smart contract, plus an additional 371 million UST provided as cross-chain incentives on Ethereum, reducing the UST supply overhang by about 11%.



<h3 class="wp-block-heading">Futures delisted, spot next?</h3>



The Binance exchange has stopped trading in its LUNA perpetual futures contract, according to an announcement <a href="https://www.binance.com/en/support/announcement/ef3ce76d5c2d45ee9b6dc3f281cde744" target="_blank" rel="noreferrer noopener">posted Thursday</a>.



The Gemini exchange has moved LUNA-USD into a restricted trading mode.



“Due to market conditions we have switched trading for $LUNA and $UST into limit-only mode,” states an email to customers seen by Blockworks. All non-USD trading pairs have been halted, as well, according to a <a href="https://status.gemini.com/" target="_blank" rel="noreferrer noopener">status page</a> post at 11:39 am ET.



Limit-only mode means that traders can only place limit orders, not market orders.



Bill Barhydt, the founder of crypto exchange Abra, told Blockworks the platform would halt trading in LUNA if necessary to protect customers. &#8220;We don’t want users getting screwed on spreads for larger orders so we’re monitoring closely. We may turn trading off temporarily or permanently if the situation warrants,&#8221; Barhydt said.



This is a breaking story. It will be updated.



This story was updated on May 12, 2022, at 2:15 pm ET and at 3:55 pm ET.



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Terra Community Halts and Patches Chain To Protect What’s Left

Garrett Harper

On today&#8217;s episode of &#8220;<a href="https://www.youtube.com/channel/UCEOv-8wHvYC6mzsY2Gm5WcQ" target="_blank" rel="noreferrer noopener">Empire</a>,&#8221; Jason and Santiago start with a relevant topic: how to survive a bear market. Santiago explains how he embraces the bear and shares advice for builders and investors — including his current investment strategy.



Jason and Santi then explore the NFT market, Yuga land sale and today&#8217;s scaling challenges.



The conversation is capped off with thoughts on Lido&#8217;s dominance, Anchor&#8217;s rate drop and DAO legal battles. Tune in to hear this week&#8217;s top stories all in one episode!



Plus, hear more on:



<ul class="wp-block-list"><li>Private vs. public token markets</li><li>Apecoin&#8217;s staking proposal</li><li>The pull toward centralization</li><li>And so much more!</li></ul>



Check out what they had to say in the video below.👇



<figure class="wp-block-embed is-type-video is-provider-youtube wp-block-embed-youtube wp-embed-aspect-16-9 wp-has-aspect-ratio"><div class="wp-block-embed__wrapper">
<iframe loading="lazy" title="Retail&#039;s Last Hope in the Bear | Weekly Roundup" width="1024" height="576" src="https://www.youtube.com/embed/CyQda53NDls?feature=oembed" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture" allowfullscreen></iframe>
</div></figure>



<h3 class="wp-block-heading">About the show</h3>



&#8220;Empire&#8221; is a twice-a-week show where we share the real crypto stories that aren’t heard elsewhere. On Mondays, Jason and Santiago Santos interview crypto industry movers and shakers to talk about their struggles, bold moves and tough decisions. Finish off the week with Friday&#8217;s weekly roundup episode that covers the top news and narratives of the week.



For any NPR or Guy Raz fans out there, you can think of &#8220;Empire&#8221; as a &#8220;How I Built This&#8221; for the bitcoin and crypto industry.



Subscribe to &#8220;Empire&#8221; today on&nbsp;<a href="https://podcasts.apple.com/us/podcast/empire/id1554930038" target="_blank" rel="noreferrer noopener">Apple</a>&nbsp;or&nbsp;<a href="https://open.spotify.com/show/4UTePv1CR3APdKOiosR3Iq" target="_blank" rel="noreferrer noopener">Spotify</a>. Watch episodes on&nbsp;<a href="https://www.youtube.com/channel/UCEOv-8wHvYC6mzsY2Gm5WcQ" target="_blank" rel="noreferrer noopener">YouTube</a>.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.



Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. <a href="https://blockworks.co/newsletter/onthemargin">Subscribe to the Forward Guidance newsletter</a>.



Get alpha directly in your inbox with the <a href="https://blockworks.co/newsletter/research">0xResearch newsletter</a> — market highlights, charts, degen trade ideas, governance updates, and more.



The Lightspeed newsletter is all things Solana, in your inbox, every day. <a href="https://blockworks.co/newsletter/lightspeed">Subscribe to daily Solana news</a> from Jack Kubinec and Jeff Albus.