ver the weekend, the Acala Network's aUSD stablecoin depegged by more than 99%, forcing the team to postpone a hacker's wallet, raising doubts about the network's claim to be decentralized.

On August 14, a hacker exploited a bug in the iBTC/aUSD liquidity pool, issuing 1.2 billion aUSD with no collateral. In response, the team froze the mistakenly minted tokens by putting the network in maintenance mode.

Other features such as swaps, xcm (cross-chain communications on Polkadot), and Oracle pallet price feeds were also suspended until "further notice."

While the decision to put the network into maintenance mode and freeze funds in the hacker's wallet may have been intended to protect users and the network from further harm, decentralization supporters have slammed the move.

Acala is a cross-chain decentralized finance hub that issues the Polkadot (DOT) blockchain-based stablecoin aUSD. AUSD is a crypto-backed stablecoin that Acala claims are resistant to censorship. iBTC is a wrapped Bitcoin (BTC) cryptocurrency that can be used in DeFi protocols.

Members of the community have pointed out the irony of the platform’s claims about aUSD's censorship resistance, given how quickly the protocol froze funds. On August 14, Twitter user Gr33nHatt3R.dot noted that decisions “would have to go to governance to be 'decentralized' finance."

A participant of the project's Discord channel, usafmike, suggested rolling back the chain to reverse the token mints completely but was met with opposition from another member, skylordafk.dot, who said such an action would "set a harmful precedent."

The network was still in maintenance mode, blocking all token transfers at the time of writing, but the team confirmed that the bug had been fixed. The wallets that received erroneously minted aUSD were identified, and 99% of them were still on Acala, leaving the possibility that the community could retrieve them if enough people voted to do so.

The exploit is the second big one in a week, following an attack on Curve Finance (CRVfront )'s end on August 9 that directed users to approve a malicious contract. The issue differs from Curve's in that the latter's pools were not jeopardized, as users who interacted directly with its smart contracts encountered no problems.

aUSD is the recent stablecoin to lose its peg in recent months, following in the footsteps of Terra USD (UST), which was renamed Terra Classic USD in May. (USTC). Tether (USDT) and Dei (DEI) are two other notable depegs (DEI).

Aug 15, 2022
Crypto News

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