Acala’s Stablecoin Falls by 3.65% In 24 Hours.
Several stablecoins have had a horrible year sustaining their US dollar value peg, and Acala network’s aUSD is no different. In a tweet today, PeckShieldAlert reported the popular Ethereum-based decentralized finance (DeFi) project’s stablecoin had seen its price drop below $0.71, 3.65% in the last 24 hours.
#PeckShieldAlert Stablecoin $ausd at $0.7 https://t.co/Mof5RfmUug pic.twitter.com/Hx8wlQJaBD
— PeckShieldAlert (@PeckShieldAlert) August 29, 2022
What Caused the Price Drop?
Recently, the native stablecoin for the Acala network, aUSD, depegged and dropped by 99% after hackers created 3 billion tokens by exploiting a vulnerability in a new liquidity pool. The network identified the issue as a misconfiguration of the iBTC/aUSD liquidity pool that resulted in error mints of 3 billion, currently resting in 16 different accounts.
According to the tweet from Acala Network today, the team has located the 1.7%(amounting to 52M) of the 3.02B aUSD error mints. Acala stated that much of the trace work was geared towards analyzing txs of the involved address and movement of aUSD error mints.
Since last week’s incident, many of Acala’s services have been paused. However, the team behind the Acala network is currently investigating the incident. They have already implemented some changes to their system to prevent similar attacks from happening in the future.
What is Acala USD (aUSD)?
Acala introduced the Acala USD (aUSD) as a synthetic currency backed by a basket of decentralized assets. The platform aimed to create a price-stable cryptocurrency that could be used for transactions and payments without the volatility associated with other digital assets.
The aUSD stablecoin is minted when users deposit any of the four reserve tokens — UST (USDt), aDAI, aUSDC, and sUSD — into the Acala Network. The price of the aUSD is then algorithmically stabilized against the USD through on-chain mechanisms.
The supply of aUSD increases when more users deposit reserve tokens into the system and decrease when users redeem their aUSD for reserve tokens.
The aUSD stablecoin is an ERC20 token currently listed on several popular cryptocurrency exchanges, including Binance, Huobi Global, OKEx, and Uniswap.
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