Stablecoins are facing a tough year. For those unaware, stablecoins are linked to an underlying asset, such as precious metal such as gold, or the US dollar. In May, the de-pegging of the TerraUSD (UST) stablecoin lead to its interlinked LUNA crypto coin losing nearly all its value, resulting in a loss of $40 billion. Other stablecoins such as DAI and USDT were also unable to hold its US dollar value. Now, the Polkadot-based stablecoin Acala Dollar (AUSD) appears to be the latest victim of dollar de-pegging, as it dipped below the $1 mark on August 14.
The sudden dip was caused due to reports of hackers minting AUD 1.2 billion on the Acala Network through an exploit. On August 14, the Acala Network took to Twitter on Sunday to announce, “We have noticed a configuration issue of the Honzon protocol which affects aUSD. We are passing an urgent vote to pause operations on Acala, while we investigate and mitigate the issue. We will report back as we return to normal network operation.”
Binance CEO Changpeng Zhao retweeted the post, saying, “ACALA protocol is currently under compromised [sic]. Apparently there was a bug in the iBTC/AUSD pool and attacker wallet now holds over a billion $AUSD. We are monitoring. (AUSD is not listed on Binance).”
Acala followed up by tweeting that a misconfiguration was identified in the iBTC/aUSD liquidity pool “that resulted in error mints of a significant amount of aUSD.” It added that functions “including swap, xcm, horizon-related etc” has been paused “until further notice.”
As a precaution, the network will “continue on-chain activity trace” and it will share the results with its community to “facilitate formulation of community proposal & decision making to resolve the error mint of aUSD and restore aUSD peg.”
At the time of writing, AUS managed to regain some of its value, currently priced at $0.9084, as per CoinMarketCap data.
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