The blockchain behind the collapsed TerraUSD stablecoin and affiliated Luna token stopped processing new transactions for the second time in less than a day.
Terraform Labs said in a tweet from its verified Twitter account that validators, the entities responsible for verifying transactions on the blockchain, had taken the step of “devising a plan to reconstitute” the Terra network.
TerraUSD was one of the largest and most closely watched algorithmic stablecoins before its predicted 1-1 peg to the dollar broke down this week. The crash sent shockwaves through cryptocurrencies, causing deep losses before confidence stabilized.
On Friday, a tweet from a Terra developer that was reposted by the verified Terra account said that the community was weighing various options to bring back the ecosystem. Those options include restoring the Terra blockchain to where it was before TerraUSD crashed, in an apparent attempt to quickly undo the damage caused by the event.
Another proposal the developer tweeted was to “fully collateralize” TerraUSD, or UST, and draft new mechanisms on how to redeem it against sister Luna token. The tweet did not include any details about how the proposals would be carried out.
The relationship between UST and Luna was central to the former’s attempts to maintain the $1 peg. Traders could trade one unit of the stablecoin, whether it was trading at $1, lower or higher, for one unit of Luna, and vice versa. The effect of dumping UST at prevailing prices was to drastically increase the supply of Luna, further driving down the price of that token.
The developer also seemed to suggest that ending Terraform Labs’ control of the Terra ecosystem was being considered. “We must save the remaining value in the ecosystem and community and rebuild the right way,” they wrote.
Representatives for Terraform Labs’ title sponsor Do Kwon and Luna Foundation Guard did not immediately respond to a request for comment.
The stablecoin was trading below 20 pence on Friday morning in London, according to Bloomberg data. The Luna token has sunk to near zero, compared to its all-time high of $119.51. The broader crypto markets rallied, with Bitcoin rising as much as 8.4%.
“A quorum among the validators is attempting to shut down the network to prevent a DECIMAL crisis due to the exponential depreciation of LUNA,” read a post on the Terra Validators Discord server, seen by Bloomberg before the transaction closed.
The total number of Luna tokens in circulation increased from 1.46 billion yesterday to over 6.5 trillion as of Friday morning, according to data from CoinMarketCap.