Terra Chain resumes operation after two-hour pause in block production

On Thursday, two hours after Terraform Labs announced it was halting block production to prevent governance attacks on the network, Terra Chain resumed operations. As part of an emergency action plan.

in TwitterTerra has announced that validators have officially suspended the chain at block height 7603700 “after severe $LUNA inflation and a significant reduction in attack costs”.

Earlier this week, the UST stablecoin removed the peg from the US dollar, sweeping over 99% of LUNA’s value. However, the TFL has now launched a community proposal to contain this catastrophe under ’emergency measures’.

A proposal to burn the rest of the UST from the community pool has been initiated and is currently being voted on. Given the slow burn rate within the Terra ecosystem and the pressure of inflated on-chain swaps, it looks like the burn proposal could absorb the deviations from the past few days.

with 6 more days Remaining on the community pool spending proposal, a majority vote in favor of enforcement at press time.

source: Terra Station

“Removing a significant portion of the excess UST supply at one time will relieve a significant amount of the holding pressure on the UST.” Read the proposal.

According to Terra, there are currently over $1 billion of UST in the community pool. TFL also plans to burn the remaining 371 million UST cross-chain on Ethereum.

After the impending governance vote, the community believes that UST in the community pool will reduce the circulation of UST by about 8.05%. Meanwhile, cross-chain UST removals are reported to account for around 11% of outstanding UST debt.

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What is supporting the burning of UST?

Kwondo, the co-founder of Terraform Labs, emphasized in a Twitter thread on May 11 how the Terra economy will solve the congestion problem caused by the massive incineration of UST.

Kwon approved Proposition 1164, which increases the BasePool size and reduces the PoolRecoveryBlock while expanding the issuance capacity of the ecosystem to $1.2 billion.

In addition to the above measures, TFL also revealed that it has placed 240 million LUNAs as a defense against network governance attacks.

“The main obstacle is to expel bad debt from the UST circulation at a rate fast enough for the system to restore the health of on-chain spreads,” TFL said.

However, Kwon noted that the on-chain swap spread has risen to 40%. Despite the deviation, Terra has asked the community to process a “TFL is in the war room” to stop the bleeding.

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