Security breach in the stablecoin hub causes a 70% drop in value, resulting in emergency measures for the AUSD stablecoin.
Acala, the decentralized hub of the Polkadot network, has suffered a major security breach, which promoted it to pass an urgent vote to pause operations.
The project’s team is currently working on investigating and mitigating the issue.
The hack was allegedly caused by a bug in the iBTC/AUSD pool. The security vulnerability allowed the attacker to issue an additional 1.2 Acala Dollar (AUSD) billion tokens.
The attacker’s wallet holds 785,938 AUSD tokens at press time.
Another Terra situation?
Due to the hack, the AUSD stablecoin lost its peg, plunging to an all-time low of $0.5713.
Even though the stablecoin has managed to claw back about 44% of its value, there is speculation about whether or not it will deteriorate into a Terra-like disaster.
Acala launched its first native stablecoin in early February. It serves as the default stablecoin for the Polkadot and Kusama ecosystem.
The AUSD cryptocurrency is backed by a slew of collateral reserve assets, billing itself as the multi-chain version of the Ethereum-based Dai (DAI) stablecoin. It exists alongside the ACA (Acala Token) government token, whose value has also plunged by more than 12% as the result of the hack.
Prior to the collapse of the high-flying TerraUSD (UST), the Acala team announced the launch of a $250 million ecosystem fund for the AUSD stablecoin back in March. The announcement made the price of the ACA governance token spike by more than 30%.
The fact that the AUSD stablecoin is overcollateralized sets it apart from the failed algorithmically-baked UST stablecoin.
More information can be found in this article.