Binance Warns Of More Terra Disruptions As Withdrawals Skyrocket

By Ambar Warrick
May 12, 2022 Updated May 23, 2022
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Terra's hard fork plans were criticized on Twitter

Binance, the world’s largest crypto exchange, warned on Thursday that trading Terra on its platform will be prone to disruptions.

The exchange cited surging withdrawal requests for LUNA, which have congested the network. Binance had temporarily suspended LUNA withdrawals earlier this week, and said it might be forced to do so again.

The move comes in the wake of LUNA losing over 99% of its value in a few days, while stablecoin TerraUSD sharply de-pegged against the U.S. dollar. The volume spikes experienced by Binance are likely LUNA investors rushing for the door to avoid further losses.

Binance sees more disruptions as volumes spike

Binance said there are a high number of pending transactions on the Terra network, which in turn is congesting the network and delaying transactions. The exchange said it is also working to increase the number of wallets to support more withdrawal requests.

Data from Coinmarketcap shows LUNA experienced a massive spike in volumes this week, maxing out at about $14 billion- roughly 14 times the daily amount seen a month ago. The token’s catastrophic 99% tumble has greatly damaged sentiment in the market.

UST, which has for now retained some of its market capital, is also seeing outsized volumes. Daily volumes maxed out at about $8 billion this week, compared to an average $400 million seen prior to the depegging.

Terra on mint and burn spree

Terra founder Do Kwon on Wednesday said the blockchain will mint more LUNA to use in supporting the UST peg. Data from Terra analytics shows that this has already occurred.

The issuance and the minting could also be contributing towards the congestion on the Terra blockchain.

The project also said on Thursday it will burn all UST in its community pool, burn the remaining 371 million UST cross-chain on Ethereum, and stake 240 million LUNA- indicating more large transactions on the chain.

With more than five years of experience covering global financial markets, Ambar intends to leverage this knowledge towards the rapidly expanding world of crypto and DeFi. His interest lies chiefly in finding how geopolitical developments can impact crypto markets, and what that could mean for your bitcoin holdings. When he isn't trawling through the web for the latest breaking news, you can find him playing videogames or watching Seinfeld reruns. You can reach him at [email protected]
The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.

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