Acala Network Resumes Operations After Burning $2.7 Billion Wrongly Minted aUSD Stablecoins
The Acala Network announced that it has resumed operations following the burning of the wrongly minted aUSD tokens, and a referendum allowing liquidity pools (LPs) to withdraw liquidity from pools and unstake LP tokens.
Acala Network Resumes Operations
On August 15th, the Acala Network announced that a vulnerability in the DEX saving code had led to the erroneous minting of 3.022 billion aUSD stablecoins. As was to be expected, the report led to the instant de-pegging of its aUSD stablecoin.
Following the network failure, Acala halted all swap operations and inter-chain communications on Polkadot and its oracles. However, on Monday, September 26th, Acala announced through its official Twitter account that it had resumed all operations. Acala wrote:
The community referendum for Stage 1 of resuming Acala operations has passed and been executed.
— Acala (@AcalaNetwork) September 26, 2022
LPs who choose to unstake LP tokens or withdraw liquidity on Acala now have the option to do so. https://t.co/yzvOz7zwxT
The recommencement of operations followed the approval of a proposal for Acala liquidity pools (LPs) to withdraw liquidity from those pools, and to unstake LP tokens. Acala has since recovered and burned 2.97 billion of the wrongly minted aUSD tokens from 16 addresses.
Another De-pegging for aUSD
The process of recovering the wrongly minted aUSD saw the token’s price rise from its lowest point of $0.009383, to as high as $0.84 on Monday, September 26th. However, the returned availability of the withdrawal option appears to have sparked a major sell-off.
The 24 hour price chart for Acala Dollar (aUSD). Source: CoinMarketCap
Despite the news, which brought on a wave of positive sentiment for the stablecoin, leading many to believe that it was on its way to re-pegging, aUSD’s price has tanked 93.2% over the last 24 hours. At press time, the stablecoin is valued at just $0.05356.
On the Flipside
- Some users repeatedly swapped aUSD error mints, thereby hindering the network’s efforts to recover the illicit stablecoins, of which they obtained just 2.97 billion, causing the imbalance in liquidity pools to grow.
Why You Should Care
The perceived manipulation in the operation of Acala has bred distrust in the project, adding to the growing list of challenges faced by stablecoins.
Read more about the Acala incident in:
Polkadot’s Acala Stablecoin (aUSD) Loses its Dollar Peg as Hacker Issues 1.3 Billion Tokens
Find out more about the growing fear surrounding stablecoins:
Algorithmic Stablecoins Could Be Banned For Two Years, According To U.S. Bill
Text source: DailyCoin.com
