As Terra's stablecoin collapses and luna hits zero, the crypto project simply switches off its network
Terraform Labs shut down the network after its two cryptocurrencies collapsed.StefaNikolic/Getty Images
Terraform Labs shut down the network powering the tokens TerraUSD and Luna after both crashed dramatically.
The organization said it is trying to find solutions to the problem after one of the biggest meltdowns in crypto history.
TerraUSD, a rumored stablecoin, collapsed to $0.15 while the Luna cryptocurrency effectively fell 100% to zero.
After the dramatic collapse of the TerraUSD and Luna cryptocurrencies, administrators responded overnight by pausing and then resuming the network — effectively turning the computer off and on again.
But the movement couldn't stop the Luna's collapse, which plummeted to practically zero.
Terraform Labs, the company behind the crypto project, has now shut down the network entirely, in collusion with "validators" who monitor transactions.
The company said on Twitter it was trying to come up with a plan to save the project and would update concerned investors soon.
Will Chen, a crypto developer associated with Terra, said the network's members are trying to find solutions to "salvage the remaining value in the ecosystem."
Major crypto exchange Binance has suspended trading in TerraUSD, also known as UST, and Luna. Other exchanges continued to allow investors to trade cryptos, although the suspension of the network means trades may not settle.
It caps a turbulent few days for the cryptocurrency project.
Before it was reversed, TerraUSD was the third-largest stablecoin in the world — a type of cryptocurrency designed to always be worth $1. Stablecoins are widely used by crypto investors as places to store money while trading.
But TerraUSD "decoupled" from the dollar over the weekend during a tumultuous time for digital assets and financial markets in general.
The depegging and weaknesses in the token's design triggered a loss of confidence in the project, which also dragged its floating sister cryptocurrency Luna down.
TerraUSD was last trading at around $0.15 early Friday morning, a far cry from the $1 mark. The stablecoin's market cap plummeted from $18.6 billion to less than $2 billion in a week.
Luna had effectively fallen 100% from over $80 per token a week ago to zero on Friday, destroying around $28 billion in value in a matter of days.
Terra's failure sent shockwaves across the crypto market, contributing to sharp falls in Bitcoin and Ethereum on Thursday. However, both cryptos rallied about 10% on Friday.
"There could be a significant negative impact on cryptocurrencies and digital finance if investors lose confidence in stablecoins," said Fitch Ratings analyst Monsur Hussain.
However, he added: “Links between crypto markets and regulated financial markets remain weak. We expect this will limit the potential for crypto market volatility spillover and greater financial instability.”
Read More: A Crypto Trading Giant Lays Out How UST Remains a "Key Tail Risk" That Could Keep Prices Falling Through a Three-Part Self-Destructive Cycle -- and Two Ways It Positions It for Further Volatility Ahead of a Major Market Event
Read the original article on Business Insider
Colorado Rockies TV reporter Kelsey Wingert recovering after being struck in head by foul ball
This Republican senator nearly tripled his congressional salary courtesy of a quirk in federal law
Luka Doncic evaluates shoulder, 'tough' scar after Warriors-Mavericks Game 1
Billionaire founder of crypto exchange Binance says he's 'poor again' after its luna holdings — once worth $1.6 billion — crashed and are now worth just $2,200.
Trump pressed Dr. Oz to declare victory in his Senate race and claimed his GOP opponents are cheating 'with the ballots that they just happened to find'
Macron tells Zelenskiy: French arms deliveries to Ukraine will intensify