Market Madness: A Brief Overview
The crypto world can be a rollercoaster ride, and the recent plunge of Terra (LUNA) is a clear example. When the price of LUNA appears to be doing its best impression of a piñata—getting whacked down to nothing—things get chaotic. Fully expecting smooth sailing thanks to Chainlink, DeFi protocols were blindsided by extreme market conditions that led to a price feed suspension and a serious crisis.
Blizz Finance: A Sudden Deflation
Avalanche-based liquidity platform Blizz Finance kicked off the fiasco by reporting dire consequences of the LUNA debacle. While LUNA’s price remained stuck around $0.10, malicious users found their golden ticket. They swooped in, depositing millions of LUNA before draining the protocol of all its collateral—leaving the team scrambling to pause the operations. Blizz Finance, in a state of disbelief, apologized profusely to those affected.
“Sorry to those affected. We built on the AVAX ecosystem in good faith!” — Blizz Finance
The Venus Protocol Plight
Enter Venus Protocol, which also felt the brunt of Chainlink’s suspension. With the price stuck at $0.107 while the market was screaming LUNA was actually worth a mere $0.01, they were sitting ducks. The difference in price left them grappling with an $11.2 million loss. Fortunately, they’ve pledged to tap into their risk fund to offer some restitution to affected users, because who wouldn’t want to do damage control like a superhero?
Pointing Fingers: Negligence or Bad Luck?
With losses piling up, discussions heated up in the digital alleys of Twitter. A user by the name of TheSoftwareJedi suggested that the protocols weren’t quite innocent in this tale. He pointed out that Chainlink feeds come equipped with tools to prevent this very mess and that it was a textbook case of negligence. It’s like knowing your GPS might be faulty but driving straight into a lake anyway—oops!
The Dreadful Delisting
If you thought the worst was over, think again. The Terra blockchain aptly decided to halt operations as LUNA plummeted by more than 99%. It’s almost like a scene from a disaster movie—governance attacks in the mix! Fortunately, the keen minds behind Terraform Labs managed to restart the network before you could say “blockchain.” Meanwhile, crypto exchange Binance took one big precautionary measure, announcing it would delist its LUNA/Tether (USDT) pair if the price dipped below 0.005 USDT. Spoiler alert: it did, plunging all the way to $0.000029—a price point at which you might as well buy a piece of gum instead.
