The Terra blowout is becoming more drastic each passing day and the tremors were felt across scores of other DeFi projects. Recently, a DeFi platform on the BNB chain reportedly lost over $11.2 Million after Chainlink halted its LUNA price feeds amid the market sell-off.
On Friday, the Terra network was shut down once again as developers sought to come up with a recovery plan following mass withdrawals on the platform. Earlier, the Terra blockchain was officially halted at a block height of 7603700 at the request of validators who feared possible governance attacks after LUNA’s price tanked by nearly 100%.
DeFi projects in chaos following Terra spillover
Amidst the market chaos, Chainlink suspended its LUNA/USD price feeds after the minimum value circuit breaker function was automatically triggered on its smart contract. The circuit breaker was built to protect against flash crashes and other forms of market manipulation, according to a Discord statement.
However, Chainlink’s pause resulted in damaging losses for a separate DeFi platform, Venus Protocol. A blog post showed a few users were able to force deposits on the Venus platform following Chainlink’s suspension, resulting in losses of around $11.2 Million.
LUNA’s price on Venus was last listed at about $0.107 while the market price was $0.01. Capitalizing on this disparity, a few users were able to sell LUNA over 100 times its actual price on exchanges. The team said –
“Upon this desyncing event, it was discovered that 2 accounts had suspiciously deposited a sum of 230,000,000 LUNA valued at over $24,000,000. Assets were borrowed totaling around $13,500,000.”
Incidentally, a DeFi platform running on the Avalanche blockchain had also reported a similar incident after users deposited Million’s worth of LUNA and drained its liquidity protocol. The extent of the damage was unknown.
Another recovery plan incoming?
At press time, the Terra network was down for over three hours, prompting yet another recovery plan by founder Do Kwon. While details of the said plan were not public just yet, remediation measures were rumored to include more efforts to support the UST peg.
Meanwhile, trading of LUNA and UST continues to be suspended on major crypto platforms Binance, Huobi, and BitMex.