Terra Restarted After a Second Halt With On-Chain Swaps Disabled

Terra validators halted the blockchain at block 7,607,789 at 02:13 UTC on May 13, 2022, then restored block production at 12:46 UTC with on-chain swaps disabled and inter-blockchain communication channels closed. The approximately 10-hour, 33-minute interruption is Coinburn’s calculation from the timestamps of Terra’s official halt and restart notices.

The restricted restart was the clearest operational confirmation that the collapse of TerraUSD, or UST, had become more than a market-price crisis. It had impaired the network’s security assumptions, interrupted applications and forced validators to coordinate emergency changes to what had been presented as an always-available public blockchain.

Two halts in less than a day

May 13’s stoppage was Terra’s second in less than 24 hours. Validators had first halted the chain at block 7,603,700 on May 12. Terra attributed that decision to the danger of governance attacks after severe inflation in LUNA, the network’s staking and governance asset, sharply reduced the economic cost of accumulating influence.

Block production resumed on May 12 after validators applied code that disabled new delegations. That measure effectively froze the existing distribution of delegated voting power rather than allowing rapidly issued LUNA to be used immediately for additional staking influence. Several hours later, however, the network stopped again at block 7,607,789. Terra said validators needed to develop a plan to reconstitute the network.

When production resumed on May 13, the operating conditions had narrowed further. Validators disabled Terra’s on-chain swap function and closed its IBC channels, which normally connected Terra with other networks in the Cosmos ecosystem. Terra encouraged users holding bridged assets to return them to their native chains while also warning that the Wormhole bridge was unavailable.

Why the restrictions mattered

UST was designed so holders could exchange one unit for one dollar’s worth of LUNA through Terra’s market mechanism. When UST traded below its intended dollar value, redemptions could create additional LUNA. Falling demand for UST and expanding LUNA supply then reinforced one another, weakening both market confidence and the economic security behind Terra’s proof-of-stake consensus.

Disabling on-chain swaps interrupted that protocol mechanism. It stopped the chain itself from continuing the UST-to-LUNA conversion process, but it did not restore UST’s dollar parity, reverse previously created LUNA or compensate holders. Closing IBC channels also limited movement between Terra and connected chains. The restart therefore restored transaction processing only within an emergency-constrained network; it did not restore the system that existed before the depeg.

A halted chain also prevented ordinary transfers and application transactions from settling. Decentralized-finance systems could not rely on normal block production for withdrawals, collateral management or liquidations during the interruption. That distinction mattered because an exchange could continue changing ownership records inside its own database even when customers could not deposit or withdraw the corresponding on-chain assets.

Exchanges narrowed access

Binance’s May 13 actions illustrated that separation. During the disruption, the exchange removed most spot pairs involving LUNA and UST, suspended the remaining LUNA/BUSD and UST/BUSD markets, and curtailed related margin, derivatives and yield products. After Terra resumed block production, Binance reopened only the two BUSD spot pairs, following a short delay, while warning of extreme volatility.

Those exchange decisions did not cause Terra’s consensus halt, nor did renewed trading prove that the protocol had recovered. They showed custodial venues managing their own settlement and market risks around a blockchain whose validators had suspended and materially restricted its core functions.

What May 13 established

The verified May 13 record establishes a second halt, a restricted restart and significant exchange intervention. It does not establish that UST’s peg had been repaired, that LUNA’s supply had stabilized or that any proposed reconstitution plan would succeed. Those questions depended on decisions and disclosures that came after May 13 and should be treated as separate events.