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Another depeg: Acala reveals 3 billion aUSD incorrectly minted

After the community burns $1.2B aUSD created by exploiters, Acala Stablecoins are re-pegging to $1.
| CryptoPress

After a setup issue in a recently created liquidity pool, Acala still tracks incorrectly generated coins as the dust settles from another decentralized financial hack.

The 16 wallet addresses linked to the exploit were the subject of continuing trace reports, according to the developers.

The network’s native stablecoin, Acala Dollar ($aUSD), lost its peg to the dollar on Saturday when a fault prompted the network to unintentionally generate over 1.2B aUSD. This is similar to how UST lost its peg to the dollar.

According to statistics from CoinMarketCap, aUSD was trading at about $1.02 on Saturday afternoon, New York time, falling to less than a cent per token.

After the Polkadot-based decentralized financial platform (DeFi) burned more than 1.2 billion aUSD tokens that were created over the weekend by exploiters who took advantage of a bug in one of the platform’s liquidity pools, Acala’s native stablecoin, aUSD, was close to regaining its peg to the U.S. dollar.

Coinmarketcap

One of the parachains on Polkadot, the association of connected blockchains established by Ethereum co-founder Gavin Wood, is Acala.

Acala stated in a post-mortem published on Monday that a new iBTC-to-USD liquidity pool launched on Saturday had a software flaw. As a consequence of claiming prizes from the liquidity pool, 16 liquidity providers got around $1.2B in freshly created money per day. In the prize pool, there are still another 4.3M unclaimed.

The flow of the tokens was tracked by anonymous Twitter users, who speculate that some of the wallets that acquired the aUSD may have done so unintentionally. Others, however, attempted to get the funds by sending the aUSD to Moonbeam, another Polkadot ecosystem blockchain, or by swapping them for other tokens and sending them to other chains.

Some estimates place the entire amount of tokens removed from Acala at about $1.6 million.

According to the post-mortem, more than 99% of the $1.2B coins are still present on the Acala network. Within three hours of finding the flaw, Acala disabled the transfer of those tokens and is now suggesting that they be destroyed in order to restore the currency peg to USD.

Burn proposal

More than 95% of votes voted in favor of burning the falsely issued US dollar.

The stablecoin might be re-pegged quickly, with the community having a say in the strategy selected to close the exploit, while the cryptocurrency world debates whether the Acala Network was appropriate to effectively shut down its network.

Theoretically, an attacker was able to mint the incorrect number of aUSD due to a misconfiguration in the iBTC/aUSD pool, however, investigations are still underway. This raised concerns that the attacker would have used the unauthorized aUSD tokens to buy iBTC and convert them into bitcoins, which would have prevented Acala from recovering the tokens and reestablishing their parity.

Photo: Yaoqi on Unsplash.

© 2022 Cryptopress. For informational purposes only, not offered as advice of any kind.

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