Terra temporarily halted its blockchain as its native asset LUNA suffered through extreme hyperinflation and price collapse.
The embattled algorithmic stablecoin protocol halted the blockchain on Thursday in order to prevent governance attacks because LUNA’s inflation significantly reduced the cost of an exploit. Terra resumed block production around 11 a.m. PT.
LUNA’s circulating supply skyrocketed from around 345 million on Tuesday to more than 1.46 billion on Thursday, according to crypto analytics firm Messari.
Price-wise, LUNA plummeted more than 99% in 24 hours, going from around $1.00 on Wednesday to a low of less than $0.0083 at one point on Thursday morning. The collapsing crypto asset is trading at $0.02719 at time of writing, after being priced at a high of more than $119 less than 40 days ago.
LUNA’s price crashed after Terra’s UST stablecoin lost its peg to the dollar. UST was designed to allow holders to redeem 1 UST for $1 worth of LUNA. When UST dipped well below the dollar mark, massive amounts of sell-pressure dragged down LUNA’s prices as aggressive arbitrage took effect. UST is trading at $0.3346 at time of writing.
Terra founder Do Kwon addressed the LUNA community on Twitter early on Wednesday morning with what he said was a plan to weather the crisis. Kwon, however, has remained silent since then as LUNA’s price collapse compounded severely.
Kwon tweeted and replied to tweets dozens of times a day in the days leading up to LUNA and UST’s price crashes.