Another Stablecoin Deviates From USD Peer, Polkadot-Based AUSD Loses 98% In Value Cryptocurrency


2022 was the year of broken stablecoins as myriad dollar-pegged crypto assets stripped of their dollar value this year. On August 14, the Polkadot-based stablecoin alpaca usd (AUSD) fell below one US cent, only to rebound in the $0.95 region a few hours later. Reports indicate that the Acala protocol was compromised and an attacker managed to mint AUSD 1.2 billion.

Polkadot’s AUSD Stablecoin Slips Well Below $1 Parity

Along with USDT, USDC, DAI, and a few others, a number of stablecoins have had a terrible year in terms of holding their value in US dollars. The depegging of terra usd (UST), now known as USTC, caused the entire Terra ecosystem to implode and over $40 billion evaporated from the crypto-economy. Following this event, stablecoins like Waves’ neutrino usd (USDN), Abracadabra’s magic internet money (MIM), and Tron’s USDD slipped below $1.

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

Polkadot’s Acala Network tweeted about the issue just before the massive swings in the value of AUSD. “We have noticed a Honzon protocol configuration issue that affects AUSD”, official Acala Network Twitter page wrote. “We are passing an urgent vote to suspend operations on Acala, while we investigate and mitigate the issue. We will report back when we return to normal network operation,” the team added.

Binance CEO Changpeng Zhao (CZ) also tweeted on the situation of the AUSD. CZ wrote:

The ACALA protocol is currently compromised. Apparently there was a bug in the iBTC/AUSD pool and [the] the abuser’s wallet now contains over AUSD 1 billion. We monitor. (AUSD is not listed on Binance).

Acala protocol says ‘misconfiguration’ resulted in ‘significant AUSD errors’

A flurry of others reports say a hacker managed to mint AUSD 1.2 billion, which ultimately caused the stablecoin unpeg incident. A few hours later, Acala confirmed that there had been an error which resulted in the minting of large amounts of AUSD. “We have identified the issue as a misconfiguration of the iBTC/AUSD liquidity pool (which went live earlier today) which resulted in typing errors of a significant amount of AUSD,” the report said. ‘crew. said on Sunday.

Alpaca USD (AUSD) chart on August 14, 2022 at 3:49 PM (EST).

Acala says the “misconfiguration has since been corrected” and the team managed to identify the wallets that received the mistakenly minted AUSD tokens. Acala posted the news at 7:59 a.m. (EST) and noted that an on-chain investigation is underway.

“Awaiting the collective governance decision of the Acala community on [the] resolution of the typing error, those erroneously minted aUSD remaining on the Acala parachain as well as those swapped native Acala parachain tokens have been deactivated for transfer,” the team added. Despite this news, the US Dollar AUSD remains at $0.01159 per coin as of 4:00 PM EST, at least according to AUSD market data from coinmarketcap.com.

Keywords in this story

$0.01165, 1.2 billion AUSD, 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 the Alpaca USD (AUSD) pulling back from the $1 parity on Sunday? Let us know what you think about this topic in the comments section below.

Jamie Redman

Jamie Redman is the Chief Information Officer at Bitcoin.com News and a fintech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He is passionate about Bitcoin, open-source code, and decentralized applications. Since September 2015, Redman has written over 5,700 articles for Bitcoin.com News about disruptive protocols emerging today.




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