Top cryptocurrency trading platform Binance has halted LUNA and UST withdrawals due to network congestion and slowness. Due to a significant volume of outstanding withdrawals, LUNA and UST withdrawals were suspended at 2:20 a.m. UTC on May 10. Withdrawals will resume once the network is stable and the volume of pending withdrawals has decreased, according to the exchange.
Withdrawals on Terra Network $LUNA temporarily suspended.https://t.co/hIGrAEzOwD— Binance (@binance) May 10, 2022
Terra's algorithmic stablecoin, UST, suffered a free fall after losing its peg, as previously reported. Terra (LUNA) is now trading at $31.79, down 48.59% in the previous 24 hours, while UST stablecoin is now trading at $0.914, down 9% below $1.
On May 10, UST Terra, Terra's algorithmic stablecoin, fell from its $1 peg to $0.61 lows.
Binance: Withdrawals for LUNA and UST tokens on the Terra (LUNA) network were temporarily suspended on 2022-05-10 at 02:20 AM (UTC) due to a high volume of pending withdrawal transactions. This is caused by network slowness and congestion. https://t.co/29cFnmkGUe— Wu Blockchain (@WuBlockchain) May 10, 2022
According to blockchain data and crypto market participants, the de-pegging was likely sparked by TerraUSD withdrawals from decentralized projects Curve Finance and Anchor. On Sunday, U.Today reported that the price of Terra's native asset, LUNA, saw a huge drop as UST stablecoin briefly lost its peg after someone dumped $285 million worth of UST tokens on Curve and Binance over the weekend.
Stablecoins are designed to maintain a peg to the value of currencies like the U.S. dollar, and traditional types of these tokens are backed by assets such as cash or cash equivalents. UST, on the other hand, is an algorithmic stablecoin with no such asset backing, relying instead on trade and treasury management to keep its value.
Terraform Labs CEO Do Kwon had offered to acquire up to $10 billion in Bitcoin to support the UST stablecoin earlier this year. To help stabilize the digital currency and prevent future instability in Terra and LUNA, the Luna Foundation Guard (LFG) council has resolved to provide $1.5 billion in loans denominated in both UST and Bitcoin.