Acala Stablecoin Returns to Dollar Peg Following 1.29B aUSD Burning

08/17/2022By: L, Laura

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Polkadot-based DeFi platform Acala native stablecoin aUSD is returning to its dollar peg after the community’s vote to burn 1.29 billion aUSD.

These tokens were minted after an exploit of a “misconfiguration” in one of Acala’s liquidity pools. Once attackers exploited the flaw, the mass minting of the stablecoin could have sent its value plummeting.

The coin de-pegged and dropped to a new all-time low of $0.0054 on August 14.

However, the stablecoin has since pumped 10,158% over the past 24 hours and is now trading at $0.92, according to data from Coingecko.

The recovery comes amid a new burn scheme that the Acala community voted on yesterday.

The proposal sought to burn the 1.29 billion aUSD tokens held by 16 wallet addresses involved in Acala’s newly-launched iBTC/aUSD liquidity pool smart contract exploit.

Roughly 95% of voters unanimously accepted the proposal, and a meager 5% opposed it. Following its acceptance, the proposal was executed earlier today.

“The recently passed community governance referendum has now been executed,” tweeted Acala at 2 AM UTC. “1,292,860,248 erroneously minted aUSD have been returned to the honzon protocol and burned.”

The burn event helped aUSD regain its dollar peg rapidly.

According to a trace report, nearly 99% of the erroneously minted aUSD that remained on Acala were burned from exploiters’ wallets.

The remaining 1% were swapped or moved to other parachains. The team is still in the process of recovering them.

Acala parachain also remains paused.

Depite reverting the mass-minting of aUSD, many in the Acala community raised concerns around the project’s ability to pause the parachain amid the chaos.

A parachain is an independent blockchain built on Polkadot that can interoperate with any other parachain in the network.

“I realize that this is done with good intent, but this is a slippery slope,” tweeted a user who expressed concerns about Acala’s operations

“I agree it is a good thing to fix the problem hurting normal users and not letting the hackers get away with anything; that being said, I also don’t want to see some proposal to take my or any other normal user’s money or rights by the voting of some crowd,” a user of Acala’s discord said.

 

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