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Another Stablecoin Breaks Away From USD Parity, Polkadot-Based AUSD Loses 98% – Bitcoin News

2022 was the year of broken stablecoins as countless dollar-pegged crypto assets were depegged from their dollar value this year. On Aug. 14, polkadot-based stablecoin Alpaca USD (AUSD) fell below a US penny, only to fall back into the $0.95 region hours later. According to reports, the Acala protocol was compromised and an attacker managed to mint AUSD 1.2 billion.

Polkadot’s AUSD stablecoin slipped well below the $1 parity

Along with USDT, USDC, DAI, and a few others, a number of stablecoins have had a terrible year when it comes to holding up their US dollar value. The depegging of Terra usd (UST), now known as USTC, caused the entire Terra ecosystem to implode, evaporating more than $40 billion from the crypto economy. Following this event, stablecoins such as Waves’ Neutrino USD (USDN), Abracadabra’s Magic Internet Money (MIM) and Tron’s USDD slipped below the $1 mark.

While Terra’s USTC never recovered the $1 peg, on August 14, 2022, USDN, MIM, and USDD all trade for $0.99 per coin. However, on the same day, polkadot-based stablecoin Alpaca USD (AUSD) lost its peg. Data from coinmarketcap.com shows that an all-time low of around $0.006383 per unit was recorded on Sunday. As I was writing this post at 3:15pm EST, the price of AUSD had rebounded back into the $0.95 area, but then quickly slipped to $0.01165 in no time.

Polkadot’s Acala Network tweeted about the issue just before the massive swings in AUSD’s value. “We noticed a Honzon protocol configuration issue affecting AUSD,” Acala Network’s official Twitter page wrote. “We are passing an urgent vote to suspend operations on Acala while we investigate and mitigate the issue. We will report as soon as 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 contains over AUSD 1 billion. We monitor. (AUSD is not listed on Binance).

Acala log states that “misconfiguration” resulted in “error minting a significant amount of AUSD”.

A flood of others reports Let’s say a hacker managed to mint AUSD 1.2 billion, which ultimately caused the stablecoin depegging incident. Hours later, Acala confirmed that there was an error that resulted in the minting of large amounts of AUSD. “We identified the issue as a misconfiguration of the iBTC/AUSD liquidity pool (which went live earlier today) that resulted in a significant amount of AUSD being mis-minted,” the team said said On Sunday.

Alpaca usd (AUSD) chart on Aug 14, 2022 at 3:49pm EST.

Acala says the “misconfiguration has since been fixed” and the team managed to identify the wallets that received the mis-minted AUSD tokens. Acala posted this news at 7:59 a.m. EST, noting that an onchain investigation was ongoing.

“Pending decision on Acala community collective governance [the] After resolving the minting error, those mistakenly minted AUSD that remained on Acala Parachain along with those exchanged native Acala Parachain tokens have been disabled for transfer,” the team said added. Despite this news, the US dollar value of AUSD remains at $0.01159 per coin as of 4:00 p.m. EST, at least according to coinmarketcap.com’s AUSD market data.

tags in this story

$0.01165, AUSD 1.2 billion, Acala Network, ACALA Protocol, AUSD, DAI, Depeg, Depegging, Honzon Protocol, iBTC/AUSD Pool, Parity Loss, MIM, Misconfiguration, Polkadot, Polkadot-based stablecoin, stablecoin , stablecoins, USD parity, USDC , USDN, USDT, UST, USTC

What do you think of Alpaca USD (AUSD) depegging from $1 parity on Sunday? Let us know what you think about this topic in the comment section below.

Jamie Redman

Jamie Redman is the news director at Bitcoin.com News and a Florida-based financial technology journalist. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for bitcoin, open source code and decentralized applications. As of September 2015, Redman has written more than 5,700 articles for Bitcoin.com News about today’s emerging disruptive protocols.

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