Terra network halt leaves LUNA-based ETPs unable to trade


VanEck, Valour and 21Shares have been forced to halt their LUNA-based exchange-traded products (ETPs) as the Terra Network remains halted. 

All three products trade in the European markets, offering exposure to the Terra network. Those products have crashed with the de-pegging of LUNA, as their shares are tied to the underlying asset price. 

Issuer VanEck announced today that it would suspend creations and redemptions for its VanEck Terra ETN given the halts in the Terra Network. Terra halted its blockchain twice in 24 hours due to fears it had become vulnerable to an attack. Terraform Labs co-founder and CEO Do Kwon has since pitched a revival plan involving the creation of 1 billion tokens. 

When the network is halted, it poses problems for ETPs based on the underlying asset.

"VanEck is unable to conduct transactions in Luna through the Terra network," said VanEck's statement. "Therefore, it is technically not possible to accept creations and redemption for VanEck Terra ETN."

21Shares issued informational resources on the LUNA fallout yesterday, saying the volatility in LUNA will be reflected in the indexed products.

"We will continue to closely monitor our products to ensure that they deliver the intended allocations and allow investors well-diversified exposure to this emerging (and sometimes volatile) asset class," said the firm in yesterday's statement

Like VanEck, the halt of the network means 21Shares is unable to execute the creation and redemption mechanisms in its product. The firm's CEO and co-founder Hany Rashwan told ETF Stream that the firm would continue to closely monitor the situation. 

Valour, meanwhile, said it elected to halt its Valour Terra SEK, citing the "high volatility and prevailing uncertainty around the Terra ecosystem." The product trades on the Nordic Growth Market exchange. 

"It is Valour's intention to provide a market, through the market maker, as soon as it is possible and allowed," the issuer said in a statement. "We keep a continuous dialogue with the exchange."

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May 5, 2022, 3:17PM UTC