Terra’s total value locked suffered a major fall, losing as much as $14 billion, amid the de-pegging fiasco resulting in reduced DeFi investor interest and a bearish market. The protocol lost around 78% in TVL since the first quarter of 2022. De-pegging ofUST, the protocol’s stablecoins made the situation worse.
Following this, different other platforms, exchanges such asBinance suspended LUNA’s interaction over extreme market conditions.
Chainlink halted the price feed due to extreme market conditions with the LUNA token. As per the official announcement, the unprecedented volatility across the cryptocurrency markets triggered the minimum value circuit breaker for the LUNA/USD price feeds.
<p lang=«en» dir=«ltr» xml:lang=«en»>Official team statement on the Chainlink LUNA/USD Price Feeds situation pic.twitter.com/EjA5naYalu— ChainLinkGod.eth (@ChainLinkGod) May 13, 2022
But this wasn’t it. This development affected two decentralized finance (DeFi) protocols due to a price discrepancy. DeFi lending platform, Venus Protocol explained that when Chainlink paused the LUNA price feed, the LUNA price on their platform remained at $0.107 while the market price stood at $0.01.
“In order to de-risk this situation, the protocol paused using PauseGuardian via multisig,” it stated.
<p lang=«en» dir=«ltr» xml:lang=«en»>Dear Venus Community,Due to the unanticipated suspension of Chainlink's LUNA price feed, Venus has taken a precautionary measure to protect our users and is currently paused.
A VIP to unpause Venus following the disabling of LUNA has been launched: https://t.co/RSnGmshIeG
— Venus Protocol (@VenusProtocol) May 13, 2022
The protocol got its price feeds from Chainlink oracles- This is where the problems began. As per further
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