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Acala Stablecoin aUSD Collapses After Parachain Exploit

Acala Stablecoin aUSD Collapses After Parachain Exploit

Acala Community’s native stablecoin, aUSD, collapsed to zero on Sunday after hackers exploited a worm in a newly deployed liquidity pool to mint over 1.28 billion tokens out of thin air.

Key Takeaways

  • On Sunday, Polkadot’s DeFi Hub Acala Community suffered an exploit that noticed its native over-collateralized stablecoin aUSD plummet to zero.
  • The exploit used to be as a result of a “misconfiguration” location in the newly launched iBTC/aUSD liquidity pool that allowed customers to mint limitless aUSD from thin air.
  • After the incident, Acala straight halted swaps and base-chain transfers, leaving the exploiters stuck with round 99% of the erroneously minted aUSD on the parachain.

Acala fleet place the network in repairs mode, pausing on-chain swaps, Polkadot base-chain communications, and oracle label feeds to place up the stolen funds from leaving the parachain.

Acala USD Depegs

Acala Community’s native stablecoin, Acala USD (aUSD), has collapsed to zero.

We own identified the placement as a misconfiguration of the iBTC/aUSD liquidity pool (which went dwell earlier as of late) that resulted in error mints of a serious amount of aUSD

1/

— Acala (@AcalaNetwork) August 14, 2022

On Sunday, Polkadot’s decentralized finance hub, Acala Community, suffered a excessive exploit that noticed its native stablecoin aUSD collapse from its focused $1 peg to effectively zero. “We own identified the placement as a misconfiguration of the iBTC/aUSD liquidity pool (which went dwell earlier as of late) that resulted in error mints of a serious amount of aUSD,” Acala mentioned yesterday on Twitter.

Per on-chain records, one hacker erroneously minted round 1.28 billion aUSD tokens and then swapped a minute fragment for Acala’s native token ACA and 4 varied tokens. Almost straight away after the incident, Acala place the parachain in repairs mode and paused swaps, base-chain transactions, and oracle label feeds, leaving the hacker stranded with round 1.27 billion worthless aUSD tokens on the network.

The on-chain records also printed that several varied customers mimicked the everyday hacker and exploited the worm for themselves, minting between 80 million to 25,000 aUSD every and stealing hundreds of greenbacks from the liquidity pool. The entire sum of the stolen funds is estimated to be decrease than $10 million, no longer counting the price lost in aUSD’s depeg.

Acala Community is an Ethereum-acceptable Polkadot parachain—a modular and customizable honest chain constructed atop the Polkadot Relay Chain—that has self-branded as a specialized decentralized finance hub for Web3. Its ecosystem is centered all around the MakerDAO-impressed, over-collateralized stablecoin Acala USD.

In March, Acala teamed up with Polkadot parachains to start a $250 million ecosystem fund to beef up builders driving demand for aUSD. Nonetheless, yesterday’s incident, which noticed the stablecoin collapse to as regards to zero, has raised excessive concerns relating to the parachain’s direction ahead in the staff. 

Practically 24 hours after the incident, most Acala network functions are frozen, with few updates from the mission touching on its subsequent steps. Following the news, the network’s native token, ACA, fell by round 7%, from round $0.29 to $0.26.

Disclosure: At the time of writing, the author of this part owned ETH and several varied cryptocurrencies.

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