Terra Blockchain Officially Frozen Over Fears of Governance Attack, Native LUNA Token Remains Down

The plunge of Terra, that started earlier this week, is largely being blamed on the destabilisation of Terra USD’s (UST) peg to the dollar.

Terra Blockchain Officially Frozen Over Fears of Governance Attack, Native LUNA Token Remains Down

Photo Credit: Terra

The price of the LUNA token stands reduced to $0.00005525 per coin

Highlights
  • It remains unclear by when would Terra blockchain be up and running
  • LUNA is the governance token of Terra
  • Terra blockchain could be exploited for malicious purposes

The validators, or miners of Terra blockchain are concerned that the network could, at this point, be vulnerable to grave threats since its native LUNA token plunged earlier this week. The developers of the Terra blockchain has frozen it at block 7,603,700 in order to halt all transactions on the network. Validators fear that a whale buyer could unleash a governance attack on the Terra blockchain, now that the price of the LUNA token stands reduced to $0.00005525 (roughly Rs. 0.0043) per coin.

The LUNA token, that fell in value by nearly 99 percent over the week, serves as the governance token of Terra.

If one entity purchases over 50 percent of this LUNA token's supply, this entity will be able to alter the protocol. Notorious miscreants could exploit the situation and manipulate the Terra blockchain for malicious purposes, CryptoPotato explained.

That is what governance tokens are capable of. They let holders submit and vote upon the governance proposals related to upgrading a blockchain protocol. Majority holders of the governance token of a blockchain can change its working.

While the developers of Terra have taken the step to halt transaction in its network as a security measure, the development has upset members of the Terra community.

The plunge of Terra, that started earlier this week, is largely being blamed on the destabilisation of Terra USD's (UST) peg to the dollar.

This led to conversions of UST for LUNA on a mass level.

The total market cap of Terra dropped below $2.75 billion (roughly Rs. 21,246 crore), making it the 34th largest cryptocurrency at the time of writing.

At its peak, it was the eighth largest crypto token with a market cap of about $25 billion (roughly Rs. 1,93,150 crore).

For now, it remains unclear by when would Terra blockchain be defrosted, up and running again.


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Further reading: Cryptocurrency, Terra, Luna, Blockchain
Radhika Parashar
Radhika Parashar is a senior correspondent for Gadgets 360. She has been reporting on tech and telecom for the last three years now and will be focussing on writing about all things crypto. Besides this, she is a major sitcom nerd and often replies in Chandler Bing and Michael Scott references. For tips or queries you could reach out to her at RadhikaP@ndtv.com. More
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