The Acala Network (aUSD) Stablecoin Loses 99% Of Its Value Due To An Exploit

✍️ 16 August, 2022 - 16:20 👤 Editor: Jakub Motyka

• aUSD, the Acala Network stablecoin has lost 99% of its value.
• A hacker has issued over a billion aUSD tokens through an exploit.
• This is a new blow to the world of algorithmic stablecoins.

Acala Network, the Polkadot-based network responsible for the decentralized stablecoin aUSD, has suffered an exploit that has caused the loss of 99% of the value of its token. Hackers used a vulnerability to issue 1.2 billion aUSD tokens, causing it to lose its peg to the US dollar and drop to $0.00987 per token.

Acala Network is a decentralized finance (DeFi) network for stablecoins and staking liquidity. It is part of the Polkadot ecosystem and offers a wide variety of services to its users, such as decentralized exchanges, automated market makers, liquidity pools and its own algorithmic stablecoin, aUSD. >

What Will Happen To Acala Network And aUSD Holders After The Exploit?

The Acala Network team confirmed the attack after user 0xTaylor_ pointed out an error in the iBTC/aUSD pool. Via their Twitter account, they said “we have noticed an issue with Honzon protocol configuration affecting USD. We are approving an urgent vote to stop operations at Acala, while we investigate and mitigate the problem. We will inform when we return to normal network operation.”

At the moment no new report or update on the attack has been provided, however, according to user 0xTaylor_, the network can easily recover from this. He clarified that having put the network in mode maintenance to prevent transfers, “They can pass a governance proposal to reverse the state like they did last year in Karura.”This would nullify the issuance of over 1 billion unbacked aUSD tokens.

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