LUNA-based ETPs Face Difficulty In Trading As Terra Network Suffer Halts

As the Terra Network continues not to operate, VanEck, Valour, and 21Shares are being pushed to put a halt on LUNA-based exchange-traded products (ETPs).

The mentioned three products trade in the European markets, providing exposure to the Terra network. With the de-pegging of LUNA, these products have fallen out as the LUNA de-pegged as their shares are attached to the underlying asset price.

In an announcement today, Issuer VanEck revealed that it would halt creation and redemption for its VanEck Terra ETN considering the pauses in the Terra Network. Terra stopped the operation of its blockchain twice in the span of just 24 hours. Do Kwon, CEO and Terraform Labs co-founder, has since proposed a revival plan that engages the creation of 1 billion tokens.

It exhibits threats for ETPs built on the underlying asset when the network is halted.

The VanEck statement reads as VanEck is incapable of processing transactions via the Terra network; hence it’s technically impossible to take creations and redemptions for VanEck Terra ETN.

As of yesterday, 21Shares provided informational resources on the LUNA fallout, stating the volatility in LUNA will be reflected in the indexed products.

In a statement yesterday, the firm stated that it would continue to closely observe its products in order to ensure that they redeem the planned allocations and offer investors a well-diversified exposure to this emerging asset class.

The meaning of the halt of the network, like VanEck, is that 21Shares is not able to carry out the creation and redemption mechanisms in its product. Hany Rashwan, the CEO and co-founder of the firm, in an interview revealed that the company would continue to strictly monitor the situation.

Meanwhile, Valour said it elected to stop its Valour Terra SEK, citing the “prevalent uncertainty and high volatility around the Terra ecosystem.” The Nordic Growth Market exchange is the platform on which the product trades.

In a statement, the issuer said that the Valour’s intention is to give market via the market maker, without any delay and allowed. Further stating that they are in constant communication with the exchange.