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2022 has been the year of broken stablecoins as a myriad of dollar-pegged crypto-assets decoupled from their dollar value this year. On August 14, the Polkadot-based stablecoin alpaca usd (AUSD) fell below a US penny in value, only to bounce back to the $0.95 region hours later. Reports say that the Acala protocol was compromised and an attacker managed to make AUSD 1.2 billion.
Besides USDT, USDC, DAI and a few others, a number of stablecoins have had a terrible year in holding their US dollar value. The depegging of terra usd (UST), now known as USTC, caused the entire Terra ecosystem to implode and more than $40 billion evaporated from the crypto economy. After that event, stablecoins such as Waves’ neutrino usd (USDN), Abracadabra’s magical internet money (MIM) and Tron’s USDD fell below the $1 mark.
JUST IN: Hackers printed NOK 1.2 billion $AUSD on the Acala Network through an exploit.
— Watcher.Guru (@WatcherGuru) 14 August 2022
While Terra’s USTC never regained the $1 peg, USDN, MIM and USDD traded for $0.99 per coin on August 14, 2022. But on the same day, the Polkadot-based stablecoin Alpaca USD (AUSD) lost its link. Data from coinmarketcap.com shows a record low of around $0.006383 per unit was recorded on Sunday. At the time of writing this post at 3:15 PM (EST), AUSD’s price had returned to the $0.95 range, but then quickly dropped to $0.01165 in a short period of time.
Polkadot’s Acala Network tweeted about the issue just before the massive swings in AUSD’s value. “We have noticed a Honzon protocol configuration issue affecting AUSD,” Acala Network’s official Twitter page wrote. “We are passing an emergency vote to pause operations at Acala while we investigate and remedy the problem. We will report back when we return to normal network operations,” the team added.
Binance CEO Changpeng Zhao (CZ) too tweeted about the AUSD situation. CZ wrote:
The ACALA protocol is currently compromised. Apparently there was a bug in the iBTC/AUSD pool and [the] The attacker’s wallet now holds over a billion AUSD. We monitor. (AUSD is not listed on Binance).
A flurry of others reports say a hacker managed to mint 1.2 billion AUSD, which ultimately caused the stablecoin’s depegging event. Hours later, Acala confirmed that there was an error that resulted in the minting of large amounts of AUSD. “We have identified the issue as a misconfiguration of the iBTC/AUSD liquidity pool (which went live earlier today) which resulted in a significant amount of AUD being misreported,” the team so on Sunday.
Acala says that “the misconfiguration has since been fixed” and the team was able to identify the wallets that received the erroneous AUSD tokens. Acala posted this news at 07:59 (EST) and noted that a chain investigation was underway.
“Awaiting the Acala community’s collective governance decision on [the] the resolution of the bug issue, these erroneously minted USD remaining on Acala parachain along with these exchanged Acala parachain native tokens have been disabled transfer,” the team added. Despite this news, AUSD’s US dollar remains at $0.01159 per coin at 16:00 (EST), at least according to coinmarketcap.com’s AUSD market data.
What do you think about the alpaca USD (AUSD) de-pegging from the $1 parity on Sunday? Let us know what you think about this topic in the comments section below.
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