After the recent collapse of the Terra ecosystem this week, VanEck and 21Shares have decided to suspend the creation and redemption of shares in their respective Terra exchange-traded products (ETPs). The 21Shares Terra ETP (ticker LUNA SW) and the VanEck Terra ETN (VLNA GR) shall be thus halting the processes.
Terra’s native cryptocurrency LUNA was supposed to help the UST stablecoin retain its peg to the USD. However, the LUNA price crashed all the way to $0 while the UST continued to de-peg from the Dollar. Ultimately, Terraform Labs had to halt the Terra blockchain momentarily which has finally resumed now. Hany Rashwan, chief executive officer and co-founder of 21Shares, a crypto ETP provider, said:
“We will continue to closely monitor this fast-evolving situation on the underlying. The Luna network is currently operating intermittently and inconsistently producing blocks and cannot operate normally. Therefore transactions can still be performed but in a disrupted environment.”
On the other hand, VanEck said that it would take a similar stand on the matter. The issuer noted: “The low value of Luna caused issues and risks for the Terra network which trigger the decision by Terra validators to halt the network. At this point, it is unclear when (and if) the network will be restarted.”
Terra’s Path to Recovery
After all the drama around, Terra founder Do Kwon came ahead proposing a revival path for the LUNA ecosystem. He proposed resetting the Terra network ownership to $1 billion and redistributing. Do Kwon proposed redistributing this amount among the LUNA holders, UST holders, the Community Pool, and other stakeholders in the Terra ecosystem.
Also, there were reports that Swiss asset manager GAM would come forward to bailout Terra, however, it denied any such plans. It will be interesting to see what other action plans do Terra developers have going ahead.
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