Terra Update & Next Steps
Hey Sifchain Community,
We’re sharing an update about the situation surrounding Terra. Many of you have been asking questions about what happened, how Sifchain responded, and what will happen next. We’ve answered all of those questions below, and also included what you can do today to support the Terra community.
First, we want to give a heartfelt note of recognition to the difficulties experienced by those involved in the collapse, whether on Terra chain or elsewhere in DeFi. This was an enormously challenging series of events, and many of you have expressed that it affected you. Sifchain team members were impacted, too. While we grieve for the terra community, we can use this time as a Cosmos community to come together for the greater good of the ecosystem.
First, we will cover what happened during the Terra collapse, then share what we’re doing moving forward.
Terra Collapse & Sifchain Response
The implosion of the Terra blockchain had ripple effects throughout the cryptocurrency space. On May 1st, the combined market cap of UST & Terra was over $48B USD. As of this article’s writing, their combined MCAP is just over $2B USD.
On May 8, UST depegged and started a drastic downward spiral, taking LUNA down alongside it. This violent change held implications for all DEXes as they sought to navigate all available information to mitigate risk.
High transaction volume clogged the Terra network. Transactions between Sifchain and Terra started to get stuck or fail as the four Sifchain relayer partners worked tirelessly to maintain the stability of their connections.
Then, the Terra network announced that it had paused to prevent a 51% attack on the network. It re-enabled transactions, then disabled them again, then halted all IBC imports. Our users reported issues during this time as they tried to interact with Terra assets.
The speed that Sifchain as a decentralized blockchain can respond to crisis is limited by nature of requiring consensus from widely dispersed stakeholders before action can be taken.
At the point when the situation was reaching critical mass, the Sifchain team made the emergency decision to disable all actions related to UST or LUNA in order to mitigate damage to protocol liquidity during the most volatile moments of the crash.
In an emergency situation such as this, we’re not sure it would have been possible to react differently. Thank you to all of our relaying partners, validators, and users for your solidarity, work, and feedback in this time.
Today’s Situation: Terra Network has Stabilized & We’re Moving Forward
Terra Network Airdrop
The Terra team has confirmed directly with us that both users who remained in the liquidity pool and users who had funds in their Sifchain wallets are captured in the Terra team’s snapshot and eligible to receive compensation in the Terra airdrop.
The snapshot for the airdrop includes all Sifchain LUNA and UST holders & liquidity providers at the time of the ‘last known height before the pre-attack height’, or block height 6739018.
Please note that not all LUNA & UST holders are eligible across other chains, based on the parameters set by the Terra team, which you can read in detail on their governance platform.
The Terra team is administering the airdrop, and we are working closely with them to ensure that everything goes smoothly.
You can check whether you are eligible for the Terra network airdrop on Sifchain or on other networks on their governance platform: https://agora.terra.money/t/terra-ecosystem-revival-plan-2-amended/18498/5
Swaps & IBC Connections for Terra on Sifchain
Swaps between UST and LUNA, as well as imports and exports, have been enabled on the Sifchain DEX as of May 24th, 2022.
The Sifchain Community and the Sifchain DAO have been the team’s eyes and ears during the Terra crisis. There was a two-fold discussion on how to approach UST and LUNA:
- Remove integrations with LUNA and UST altogether.
- Re-enable ALL actions now that the network was stable again.
However, the IBC-locking of Sifchain had been accidentally forgotten by the Terra Team, which meant that Sifchain needed to re-enable the client in order to make actions like swaps for UST and LUNA possible once more on Sifchain.
In order to move swiftly, an ad-hoc Discord vote was raised on this, but before this vote had passed, the IBC-client between Sifchain and Terra had expired. This client is managed via DAO governance with the participation of our decentralized validator network.
An additional proposal was raised to re-enable the client, which passed, and all actions have now been re-enabled.
How You Can Get Involved
Here are simple steps you can take today to participate in the Sifchain community’s Terra response:
✅ Check your eligibility for the Terra-administered airdrop: https://agora.terra.money/t/terra-ecosystem-revival-plan-2-amended/18498/5
✅ Follow the latest updates from the Terra team on their plans moving forward: https://twitter.com/terra_money
✅ Watch for more updates on the Sifchain Discord: https://discord.gg/sifchain
To wrap up this post, we’d like to say thank you to our community. The way everyone has come together to support the LUNA and UST holders during this collapse has been unprecedented.
We are looking forward to revisiting this in a year and hope that we’ll always have this kind of thoughtful and caring group of folks involved in this project.
