Crashed Polkadot Stablecoin Comes With Solution: Huge Token Burn

This week we wrote about how yet another stablecoin lost its link to the dollar. Whether it was an accident or a deliberate hack is still unclear, but the race took a heavy blow and the clutch has still not been restored. The problematic stablecoin in question is aUSD from Acala, a decentralized finance (DeFi) protocol on Polkadot. Fortunately, there may be a solution and the community has now approved the proposal.

Stablecoins are destroyed

Last weekend, the Acala network became unstable when someone managed to mine more than 1.2 billion coins. Acala’s collateral could no longer cover that, and a de-peg (decoupling) of aUSD was the immediate result. It’s not clear whether a rogue hacker caused the problem or a bug in the software itself. Both are common in the DeFi world.

In any case, the developer team is in contact with the person responsible for the problematic wallet, and a solution is being worked on. Acala instructed the people who received these misspelled tokens to send the tokens to three wallets.

The idea now is to destroy this massive amount of tokens so that the peg can be found again. The protocol then no longer needs to add an enormous amount of collateral to return to a value of . a US dollar (USD) to come out. Network participants could vote through a referendum on the governance Acala’s website.

This proposal has now been passed, and the incorrectly minted tokens will be destroyed. Initially we thought it was 1.27 billion coins, but Acala declares on Twitter that it will destroy approximately 1.29 billion coins.

DeFi has problems

Problems like this are very common in DeFi. Moreover, they are not always hacks by people who intend to harm. The software is regularly full of problems, and you don’t see them until you run into them. This is because this market is still very new and often there are still vulnerabilities in the underlying code.

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But with these kinds of protocols, the consequences are greater than when most apps suffer from a software bug. People have put their money into it, and situations like this can make them lose confidence. Sometimes problems in DeFi are actually caused by criminals. This year the number of hacks has even increased sharply.

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