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Terra Blockchain Blocked Due to Governance Fears

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.

The LUNA token, which serves as Terra’s governance token, has decreased in value by approximately 99 percent. CryptoPotato’s accordingIf 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. till last week TerraUSD had a market capitalization of over $18.5 billion. Since then it has dropped by more than half.

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