Binance, the world’s largest crypto exchange, warned Thursday that trading Terra on its platform will be prone to disruptions.
The exchange quoted rising withdrawal requests for LUNA, which has overloaded the network. Binance had temporarily suspended LUNA withdrawals earlier this week and said it may be forced to do so again.
The move follows the fact that LUNA lost more than 99% of its value within a few days, while the stablecoin TerraUSD sharply de-pegged against the US dollar. The volume spikes that Binance is experiencing are likely LUNA investors rushing to the door to avoid further losses.
Binance Sees More Disruptions as Volumes Spike
Binance said there are a large number of pending transactions on the Terra network, which in turn overloads the network and slows down transactions. The exchange said it is also working on increasing the number of wallets to support more withdrawal requests.
Data from Coinmarketcap shows that LUNA experienced a massive spike in volumes this week, peaking at around $14 billion – roughly 14 times the daily amount seen a month ago. The catastrophic 99% tumble of the token has hurt sentiment in the market immensely.
UST, which has retained some of its market cap for now, is also seeing outsized volumes. Daily volumes peaked at about $8 billion this week, compared to an average of $400 million prior to depegging.
Terra on coin and burn spree
Terra founder Do Kwon said on Wednesday that the blockchain will use more LUNA to support the UST peg. Terra analytics data shows that this has already happened.
The issuance and minting can also add to the congestion on the Terra blockchain.
The project also said Thursday that it will burn all UST in its common pool, burn the remaining 371 million UST cross-chain on Ethereum, and deploy 240 million LUNA, pointing to more large transactions in the chain.
With over five years of experience in global financial markets, Ambar plans to leverage this knowledge for the fast-growing world of crypto and DeFi. His main interest lies in finding out how geopolitical developments could affect crypto markets and what that could mean for your bitcoin holdings. When he’s not scouring the internet for the latest news, you can play him video games or watch Seinfeld reruns. You can reach him at [email protected]
The content presented may contain the author’s personal opinion and is subject to market conditions. Do your market research before investing in cryptocurrencies. The author or publication is not responsible for your personal financial loss.
This post Binance warns of more Terra disruptions as withdrawals skyrocket
was published first on https://coingape.com/binance-warns-of-more-terra-disruptions-as-withdrawals-skyrocket/