The apparently endless freefall of Terra (LUNA) affected two decentralized finance (DeFi) protocols as a result of cost discrepancy, because the Chainlink cost feed for LUNA will get suspended over extreme market conditions.
Avalanche-based liquidity protocol Blizz Finance reported that because the cost of LUNA was stuck at $.10, attackers could deposit countless LUNA to “borrow all of the collateral.” Consequently, Blizz Finance pointed out that it is protocol was drained before its team could pause. They apologized to individuals who have been affected.
We’ve built around the AVAX ecosystem in good belief hoping that @chainlink oracles would become expected. Sorry to individuals affected.
— Blizz Finance (@BlizzFinance) May 13, 2022
Within an official statement, Venus Protocol described that whenever Chainlink stopped the LUNA cost feed, the LUNA cost on their own platform continued to be at $.107 as the market cost what food was in $.01. The woking platform apparently lost $11.two million due to the cost suspension. However, the woking platform noted that it’ll utilize its risk fund to create remedy for this shortfall.
Although it appears like the reason for the fiasco may be the suspension from the Chainlink cost feeds, some think that the losses were because of the protocols’ negligence. Twitter user TheSoftwareJedi stated that Chainlink’s feeds possess the tools essential to steer clear of the problem which it’s the protocols’ fault because of not with them.
Meanwhile, the Terra blockchain was stopped since it’s token came by greater than 99%. Based on Terraform Labs, the blockchain network was stopped to avoid governance attacks. However, its team coordinated to restart the network quickly.
As LUNA ongoing to fall, crypto exchange Binance delisted its LUNA/Tether (USDT) pair. Taking precautionary measures, the exchange announced Thursday that it’ll delist the happy couple when the LUNA cost goes below .005 USDT. LUNA has fallen below that cost point and it is now buying and selling at $.000029 during the time of writing, based on gold coin website CoinGecko.