Cryptocurrency Terra(LUNA) Collapse Brings Down DeFi Projects, Blaming Chainlink

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The fatal fall of the Earth coin (LUNA) brought down at least two DeFi projects, which now blame the problem on Chainlink’s oracles. This week was marked by the failure of the coin and its sister TerraUSD (UST), which ended up going through terrible times.

As both coins that died were related to an ecosystem of projects, whether DeFis, or others, their devaluation ended up creating a domino effect on third parties who depended on it.

It is worth mentioning that even the price of bitcoin may have been affected, since the Luna Foundation sold all the coins that he held in his possession. In any case, the case seems far from over, given the side effects of its fall.

LUNA’s fall brings down DeFi projects, which blame Chainlink’s oracles

The LUNA blockchain is another one of those centralized ones that ended up being shut down amid problems, last Thursday (12). According to a simple note on Twitter, those responsible for the coin just stated that there would be no more production of valid blocks until the recent problem is resolved.

The Terra blockchain has officially halted at block 7607789.

Terra Validators have halted the network to come up with a plan to reconstitute it.

More updates to come.

โ€” Terra (UST) ๐ŸŒ Powered by LUNA ๐ŸŒ• (@terra_money) May 13, 2022

Thus, the project Venus Protocol, another with the name of an element of the space, informed its investors that suffers from the consequences of the death of the MOON. This DeFi works on the Binance Smart Chain network and used LUNA in its operations, in addition to the Chainlink oracles.

As the drop was brutal in the last few days, the Chainlink price oracle may not have made it follow the market, and ended up fixing the price of LUNA at US$ 0.1, when it was already at US$ 0,, leading the Venus project to cancel its โ€œDeFiโ€ service.

Another troubled Defi project was Blizz Finance, which claims its fund was drained by invaders amid LUNA’s brutal takedown. Placing the blame also for the break in Chainlink’s oracle for its downfall, the project apologized to those affected and said that it will soon publish a post-mortem, indicating that it will be another to end its operations after the death of LUNA.

โ€œChainlinkโ€™s break from the LUNA oracle allowed several attackers to deposit millions of LUNA, which is still worth $0,10, according to the Chainlink oracle, to borrow the full guarantee. The protocol was exhausted before we could pause due to our timelock.โ€

A post-mortem will follow.

โ€” Blizz Finance (@BlizzFinance) May 13, 2022

How long will the market feel the consequences of the end of LUNA?

The downfall of LUNA and its ecosystem began last weekend, but it was only on Monday (9) that the collapse was noticed by the market, which sold its possessions en masse.

This certainly took a devaluation to several projects that had connections, as well as finalizing protocols that depended on its technology. It is possible that more projects in this ecosystem will manifest the end of their work, which has already begun to occur.

However, bitcoin this Friday (13) is already starting to change course and values โ€‹โ€‹8%, exceeding US$ 30 thousand and indicating that it has already got rid of any relationship with LUNA.

That is,

the market has already priced the project down and continues to recover , after a tense week for those who follow cryptocurrencies.