Due to a price discrepancy, the seemingly inexorable freefall of Terra(LUNA) had an impact on two Decentralized Finance (DeFi) protocols. The Chainlink price feed for LUNA is suspended when market conditions are extreme.
Blizz Finance, an Avalanche-based liquidity protocol, reported that attackers could deposit millions of LUNA to “borrow the collateral.” All those affected were offered an apology by the team.
With the expectation that @chainlink would behave as expected, we have built upon the AVAX ecosystem. We are sorry for the inconvenience.
— Blizz Finance (@BlizzFinance) May 13, 2022
Venus Protocol stated in an official statement that the LUNA price of their platform remained unchanged at $0.107 after Chainlink paused its LUNA price feed. The market price was $0.01. According to reports, the platform lost $11.2 million due to price suspension. The platform stated that it will use its risk fund to make up the shortfall.
Although it appears that Chainlink’s price feeds were suspended, others believe that the loss was caused by the protocols’ negligence. Twitter user TheSoftwareJedi pointed to the fact that Chainlink’s feeds contain the tools needed to avoid the problem, and that the protocol’s negligence is their fault.
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The Terra blockchain was stopped as the token value dropped more than 99%. Terraform Labs claims that the blockchain network was shut down to protect against governance attacks. Its team managed to restart the network almost immediately.
Binance, a crypto exchange, delisted its LUNA/Tether pair (USDT), as LUNA continued to fall. The exchange took precautionary measures and announced that it would delist the pair if LUNA prices fall below 0.005 USDT. According to CoinGecko, LUNA is currently trading at $0.000029 as of this writing.