Terra Blockchain Blocked Due to Governance Fears
Holders of Governance Tokens can vote on resolutions related to governance. Governance token holders could change the way blockchain works.
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Holders of governance tokens can vote on resolutions of governance |
TerraUSD's market capitalization slashed by more than half |
This has caused huge losses to the investors. |
Validators or miners of the Terra blockchain, which is linked to the stablecoin TerraUSD, fear that the massive drop this week in its native token LUNA could cause major problems for the network. The developers of Terra Blockchain have blocked it to stop all transactions on the network.
Validators fear that a whale buyer may conduct a governance attack on this blockchain as the price of the LUNA token has fallen drastically.
LUNA TOKEN :
The LUNA token, which serves as Terra's governance token, has decreased in value by approximately 99 percent. According to CryptoPotato, if an entity buys more than 50 percent of the supply of LUNA tokens it will be able to change the protocol. This situation could be misused to damage the Terra blockchain. Holders of Governance Tokens can vote on resolutions related to governance. Governance token holdings could change the way blockchains work.
The developers of this blockchain have paused transactions to keep security strong, but this has angered members of the Terra community. Other stablecoins have reserves in common assets but TerraUSD maintains it through an algorithm that controls supply and demand using Luna, another balancing token.
TerraUSD, touted as an algorithmic stablecoin, broke its 1:1 link with the dollar on Tuesday. Stablecoins are cryptocurrencies that attempt to link their market price to a reserve asset such as gold or common currencies. These are more commonly used for digital transactions that involve converting virtual assets into real assets.
USD Coin, Tether and Binance USD are some of the popular stablecoins, which are pegged to the US Dollar. Stablecoin, a rapidly growing version of crypto, has emerged as a major medium of exchange. It is often used by traders to remit funds. It is easy to exchange major stablecoins for bitcoin or other cryptocurrencies. As of last week, TerraUSD had a market capitalization of over $18.5 billion. Since then it has dropped by more than half.
Binance stops trading in tokens due to a huge drop in Terra (LUNA)!
Binance announces it is suspending its permanent contracts with LUNA/USDT
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Terra's value dropped by 99 percent within 24 hours |
Stable coins are considered safe in terms of market downturn |
Cryptocurrencies lost $800 billion in market value last month |
Terra (LUNA) is the biggest bearer of the decline in the cryptocurrency market. The earthquake in the market in the last two days badly affected many digital currencies, and most of the digital coins suffered heavy losses. But, there is one token that was most affected by this fall. The value of Terra (LUNA) fell so fast that Binance, the world's largest crypto exchange, pulled Terra (LUNA) out of its projects. May 12 turned out to be the worst day for LUNA of the Terra ecosystem when crypto exchanges like Binance turned their back on the token. Binance announced that it is suspending its permanent contracts with LUNA/USDT.
The reason for this was the big decline in Luna. Within 24 hours, the value of this cryptocurrency fell by 99 percent, causing millions of dollars in loss to Terra's investors around the world.
The talk did not stop until the announcement of de-listing Luna. The cryptocurrency continued to fall even after this and Binance made another announcement after this. The crypto exchange announced that it is also eliminating the cross and isolated margin pair, the spot trading pair, for Terra Luna. That is, in a direct sense, Binance has removed Tera from its platform.
CHANGPENG ZHAO :
A day earlier, Binance CEO Changpeng Zhao had warned investors through his official Twitter account that it is important to respect the market while trading, as it is a new market and with new stable coins. When they climb up, everyone has an edge, but when they start falling, it becomes a loss-making circle. This message of Changpeng Zhao was related to the ongoing decline in Terra.
COINMARKET CAP :
CoinMarketCap figures show that there has been a loss of $ 800 billion (about Rs 61 lakh crore) in the market value of cryptocurrencies in the last month. Almost all cryptocurrencies have continued to fall for the past several days and this is a huge drop. But stable coins are considered safe and the impact of the market downturn on them is negligible. USD Coin, Tether and Binance USD are some of the popular stablecoins and are pegged to the US Dollar.
USDT and Terra LUNA are also among these stable coins. Even after the fall in the market, there is only a slight difference in their value. But in the case of Terra LUNA on Wednesday, the trend was reversed. This coin included in the list of stable coins fell 90% within a day, which crossed the 99 percent mark by the next day.