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Acala, The Network’s Defi Center
Acala Dollar (aUSD), a stablecoin powered by Polkadot, fell to below 10 cents on Sunday as a result of hackers generating 1.3 billion of the tokens for free. Acala, the stablecoin’s issuance network, decided to halt operations as a result of the problem. Acala noted a configuration problem on its stablecoin protocol Honzon, which has a direct impact on how aUSD functions, in a tweet on Sunday.
One of the first Polkadot parachains, Acala, bills itself as the network’s DeFi center. It had just introduced a yield-bearing liquidity pool for USD and a wrapped version of bitcoin, but the pool had a flaw that limited how rewards were distributed. On-chain investigators discovered that hackers had taken advantage of the vulnerability to amass 1.3 billion aUSD, with one attacker wallet containing around 1.27 billion aUSD.
Due to the event, aUSD, which had maintained its soft peg since its debut in February, crashed to as low as 0.07 USD on KuCoin, mirroring TerraUSD’s demise in May. aUSD, however, immediately recovered and is currently trading for more than 0.90 USD. The official quantity of aUSD, according to blockchain explorers, is close to 4.8 million tokens.
The blunder was Referred to as Misconfiguration by Acala
While the stablecoin is managed via Acala’s Honzon protocol using a variety of risk management techniques, the value of the aUSD is also derived from a pool of reserve assets, mostly Polkadot ecosystem tokens. By providing certain digital assets to the protocol, users may create their own USD. In aUSD’s announcement article, it was said that this lets individuals interact, trade, and provide services using aUSD without price volatility.
The blunder was referred to as a misconfiguration by Acala, who also claimed that wallet addresses that got the incorrectly-minted aUSD had been detected and the error had been fixed the same day. The network itself hasn’t revealed how many tokens were printed throughout the event, although it claims to have kept more than 99% of them. Acala continued that the remaining illegal aUSD has been frozen until a collective governance decision has been made on what to do next.”
Nancy J. Allen is a crypto enthusiast, with a major in macroeconomics and minor in business statistics. She believes that cryptocurrencies inspire people to be their own banks, and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning. She frequently researches, and posts content on the top altcoins, their theoretical working principles and technical price predictions.
