Acala Stablecoin Exploit sees 1.2 Billion aUSD Theft Attempt

Despite the ongoing bear market, hacking and exploits have continued to dominate the cryptocurrency sector. Some of the leading decentralized finance (DeFi) projects have suffered exploits this year, with the latest victim being the Acala stablecoin. The Acala network has experienced a 1.2 billion aUSD exploit.

Acala exploit drains 1.2 billion aUSD from the network

The Acala network has become the latest victim of many exploits across the web 3.0 & crypto sector. The aUSD stablecoin has depegged by more than 99% following the hacking events that happened over the weekend.

Acala planned to halt the hacker’s wallet to respond to the depeg on the aUSD stablecoin. The team has announced it has halted the network to mitigate the effects of the hack and ensure that users are protected.

On Sunday, the Acala network was exploited by a hacker who exploited a hug in the iBTC/aUSD liquidity pool, resulting in 1.2 billion aUSD tokens minted on the protocol without the needed collateral.

The event resulted in the collapse of aUSD stablecoin that is pegged on the value of the United States dollar. The stablecoin has dropped to around $0.01. The Acala team has also frozen the minted tokens erroneously, and the Acala network has been placed under maintenance mode.

The exploit on the Acala network has also halted other protocol features, including xcm, a cross-chain communications protocol on Polkadot, and the oracle pallet price feeds. These services have been halted until further notice.

Acala is a cross-chain DeFi platform that issues the aUSD stablecoin running on the Polkadot blockchain. aUSD is a stablecoin backed by other cryptocurrencies, and according to the Acala team, the stablecoin is resistant to censorship. The exploited iBTC protocol is a type of wrapped Bitcoin that can be used in DeFi protocols.

Crypto community criticizes Acala for halting the network

The crypto community members have criticized the Acala network regarding its action of freezing the network and the erroneously minted tokens. The protocol’s move to freeze funds more swiftly than anticipated led many to believe that the network was operating like a centralized entity.

One Twitter user said the decisions would go through governance to qualify as DeFi. With the Acala team seemingly controlling what happens in the protocol, their level of decentralization is now under scrutiny.

A member of the Acala Discord channel also proposed that Acala reverts its blockchain to a time when these tokens were not minted. This is a similar response to the one taken by Ethereum after the DAO hack. However, another member rejected the proposal, who said that the action would “set a harmful precedent.” The Ethereum network is still under maintenance in a plan to block the token transfers. The team has also announced a ban on the minted tokens.

The exploit on Acala came barely a week after Curve Finance faced a front-end attack that directed users to approve a malicious contract. The problem faced by the Acala network differs from that faced by Curve Finance. In the latter, the pools were not compromised because users that interacted directly with the smart contract did not face issues.

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