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Acala Network’s aUSD Stablecoin Depegs as Hacker Mints $1.2B Worth of More Coins

UTC by Bhushan Akolkar · 2 min read
Acala Network’s aUSD Stablecoin Depegs as Hacker Mints $1.2B Worth of More Coins
Photo: Acala / Medium

The Acala team noted that it has rectified the misconfiguration along with the wallet addresses that received the erroneously minted aUSD.

On Sunday, August 14, hackers attacked the Acala Network by issuing $1.2 billion worth of aUSD stablecoins. Amid this huge liquidity pump, the aUSD stablecoin started to depeg to a great extent from the dollar.

Acala Network’s aUSD

Acala was quick enough to respond to the matter calling this a configuration issue of the Honzon protocol. Acala then decided to pass an urgent vote to pause all operations. The Acala team moved the entire into maintenance mode by freezing the erroneously minted tokens.

Acala came up with a detailed explanation later on. The team found some configuration issues with the iBTC/aUSD liquidity pool. This resulted in the erroneous minting of a large quantity of aUSD.

The Acala team noted that it has rectified the misconfiguration along with the wallet addresses that received the erroneously minted aUSD. The Acala team further noted:

“Pending Acala community collective governance decision on resolution of the error minting, these errorneously minted aUSD remaining on Acala parachain along with these swapped Acala parachain native tokens have been transfer disabled”.

Besides, the team also added that they have paused several functions including swap, xcm, honzon-related etc. They have also paused urgent governance votes until further notice. The Acla team has also paused orcale pallet so that users don’t need to concern liquidations in between time.

“Next up, we will continue on-chain activity trace, and share the results with the community to facilitate formulation of community proposal & decision making to resolve the error mint of aUSD & restore aUSD peg,” added the Acala team.

Concerns Over Acala’s Decentralization

As we know, Acala is a cross-chain decentralized finance (DeFi) hub that issues aUSD stablecoin on the Polkadot blockchain network. This is basically a crypto-backed stablecoin which is censorship-resistant. However, come of the community members have called out this irony since Acala was able to freeze funds instantly.

Many community member slaos started questioning the decentralization aspect of Acala’s DeFi hub. On of the Twitter users wrote:

“I think it would have to go to Governance to be “decentralized” finance (DeFi). If Acala centrally controls that decision is this really DeFi?”

The recent attack on Acala once again showcases the loopholes in the DeFi protocols. This year, several cross-chain bridges also have been a victim of the hacks losing millions of dollars in investors’s funds.

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Bhushan Akolkar

Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.

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