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A Crypto First? What Happens When a Blockchain Like Terra Dies

  • Collapse of TerraUSD stablecoin threatens entire ecosystem
  • Users and app developers are likely to leave for other efforts
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Crypto-Market Panic Subsides as Stablecoin Mess Lingers
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The crypto world has been riveted by the rapid collapse of the TerraUSD stablecoin. But its implosion may bring about something just as noteworthy: the death of a major blockchain.

The Terra blockchain -- the platform supporting scores of decentralized applications that let users swap crypto coins and earn yields -- was halted and then restarted twice in recent days, as the value of its main cryptocurrency, Luna, and the related TerraUSD (UST) stablecoin collapsed following a wave of selling pressure. Along the way, incentives for various parties to support the chain evaporated, sending the ecosystem that nurtured more than 110 applications connected with more than 4 million digital wallets into disarray. While the chain is running again and there are efforts in the works to keep it working -- including a new plan proposed Monday by co-founder Do Kwon to start up a new version of the blockchain without UST -- the attempt may prove futile with Luna near zero. Meanwhile, many of its functions have been disabled.