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Acala Stablecoins Near $1 Peg After Community Burns 1.2B aUSD Minted by Exploiters
Developers said trace reports were underway to identify the transactions performed by the 16 wallet addresses connected to the exploit.
Updated May 11, 2023, 5:25 p.m. Published Aug 16, 2022, 7:22 a.m.
Acala’s native stablecoin, aUSD, came close to regaining its peg to the U.S. dollar after the Polkadot-based decentralized finance (DeFi) platform burned over 1.2 billion aUSD tokens that were minted by exploiters over the weekend who took advantage of a bug in one of the platform’s liquidity pools.
The recently passed community governance referendum has now been executed.
— Acala (@AcalaNetwork) August 16, 2022
1,292,860,248 total erroneously minted aUSD have been returned to the honzon protocol and burned.
Details in thread below ⤵
STORY CONTINUES BELOW
Launched earlier this year, aUSD successfully held its soft peg to the U.S. dollar until the hack. After the attack, the price of aUSD plunged from roughly $1.03 per token to $0.009.
The peg was nearly regained Tuesday following the token burns, reaching 93 cents at writing time.
Acala held a community vote Monday that proposed burning the 1.2 billion aUSD tokens to counteract the effects of Sunday's exploit. Prices of its aUSD tokens fell 99% after exploiters minted the tokens and drained funds from Acala’s iBTC/aUSD liquidity pool.
A liquidity pool is a digital pile of cryptocurrency locked in a smart contract, which results in creating liquidity for faster transactions on decentralized exchanges (DEX) and DeFi protocols.
Over 99% of the exploited aUSD remained on Acala and a small proportion has been swapped for ACA and other tokens and transferred out from Acala parachain, developers said in a community forum post on Monday.
The Twitter account @alice_und_bob estimated that the "damage" was $0 to $10 million, "likely around 1.6M USD with a chance of recovery,” as previously reported.
Meanwhile, an ongoing trace report is underway to identify erroneously minted aUSD which have been swapped to other tokens or added to liquidity pools and to identify other relevant transactions performed by the “16 wallet addresses and token outflows to other addresses, parachains, and exchanges,” developers said in a Tuesday tweet.
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