The year 2022 saw a multitude depegged dollar-pegged crypto assets, which has led to the breaking of many stablecoins. AUSD, a Polkadot stablecoin (based on alpaca) fell to below $1.00 in August but reverted to $0.95 an hour later. According to reports, the Acala protocol has been compromised. An attacker was able to create 1.2 billion AUSD.
Polkadot’s AUSD Stablecoin Slides Well Below the $1 Parity
Apart from USDT and USDC, DAI and some others, many stablecoins had a terrible year when it came to holding their U.S. Dollar value. Depegging Terra USD (UST), also known as USTC caused the collapse of the Terra ecosystem and the loss of more than $40 million from crypto-economy. Following that event, stablecoins like Waves’ neutrino usd (USDN), Abracadabra’s magic internet money (MIM), and Tron’s USDD slipped below the $1 mark.
JUST IN – Hackers have printed 1.2 million $AUSDThrough an exploit, you can access the Acala network.
— Watcher.Guru (@WatcherGuru) August 14, 2022
While Terra’s USTC never regained the $1 peg, USDN, MIM, and USDD are all swapping for $0.99 per coin on August 14, 2022. On the same day however, the Polkadot stablecoin USD (AUSD), lost its peg. According to data from coinmarketcap.com, Sunday’s record low was $0.00638383. While writing this post at 3:15 p.m. (EST), AUSD’s price had bounced back to the $0.95 range, but then it quickly slipped to $0.01165 in a matter of no time at all.
Polkadot’s Acala Network tweeted about the issue just prior to the massive fluctuations in AUSD’s value. “We have noticed a configuration issue of the Honzon protocol which affects AUSD,” Acala Network’s official Twitter page wrote. “We are passing an urgent vote to pause operations on Acala, while we investigate and mitigate the issue. We will report back as we return to normal network operation,” the team added.
Changpeng Zhao, Binance CEO (CZ), also tweetedAbout the AUSD situation. CZ wrote:
ACALA Protocol is at present compromised. Apparently, an issue was found in the iBTC/AUSD Pool. [the] attacker’s wallet now holds over a billion AUSD. Monitoring. We are monitoring.
Acala Protocol Says ‘Misconfiguration’ Resulted in ‘Error Mints of a Significant Amount of AUSD’
Other! reports say a hacker managed to mint 1.2 billion AUSD, which ultimately caused the stablecoin’s de-pegging incident. Acala confirmed hours later that the issue was caused by an error in the iBTC/AUSD liquidity pool. “We have identified the issue as a misconfiguration of the iBTC/AUSD liquidity pool (which went live earlier today) that resulted in error mints of a significant amount of AUSD,” the team saidSunday
Acala says the “misconfiguration has since been rectified” and the team managed to identify the wallets that received the erroneously minted AUSD tokens. Acala reported this information at 7:59 AM (EST), and said that an investigation into the onchain was ongoing.
“Pending Acala community collective governance decision on [the] resolution of the error minting, these erroneously minted aUSD remaining on Acala parachain along with these swapped Acala parachain native tokens have been transfer disabled,” the team added. Despite this news, AUSD’s U.S. dollar remains at $0.01159 per coin at 4:00 p.m. (EST), at least according to coinmarketcap.com’s AUSD market data.
Do you have any thoughts about alpaca USD’s (AUSD), de-pegging at the Sunday $1 parity? Please comment below to let us know your thoughts on this topic.
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