Crypto Beginner

Polkadot-based stablecoin depegs after a breach

polkadot pegged stablecoin

Stablecoin Acala Dollar (AUSD), a Polkadot-based stablecoin, lost its parity with the US dollar following a breach over the weekend. Its price has since begun to bounce back. Multiple news reports say that the Acala protocol was compromised, and an attacker managed to make away with 1.2 billion AUSD.

Misconfiguration resulted in error: Acala Protocol

Acala confirmed hours later that an error resulted in the minting of large amounts of AUSD. The team behind the protocol issued a statement, on 14 August, that read, “We have identified the issue as a misconfiguration of the iBTC/AUSD liquidity pool (which went live earlier today), which resulted in significant AUSD error mints.”

The Acala Network has subsequently reported that it had rectified the misconfiguration issue. Also, its team has identified the crypto wallets that received the minted tokens. The team is currently carrying out an on-chain investigation and put all platform operations on hold to ensure the attacker does not move out more tokens.

Coinmarketcap.com data indicates that AUSD is barely holding its value at $0.009739 as of 16 August.

2022: Not a good year for stablecoins

The year 2022 has been unlucky for stablecoins, with several of them losing their dollar pegs. The downturn in the fate of stablecoins started with the infamous depegging of Terra USD (UST)—now known as USTC. That depegging had caused the entire Terra ecosystem to implode and more than $40 billion to evaporate from the crypto economy. Soon after, stablecoins like Waves’ Neutrino USD (USDN), Abracadabra’s Magic Internet Money (MIM), and Tron’s USDD slipped below the $1 mark.

Disclaimer : Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. The information provided in this post is not to be considered as investment/financial advice from CoinSwitch. Any action taken upon the information shall be at user’s own risk.

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