After the Exploit and Burn Repair, Acala Almost Reached Its Original Peg of 1:1

The Acala Dollar (aUSD), Polkadot’s native decentralized stablecoin, hit a new low of $0.0054 on August 14 and lost its $1 peg. Acala Network had previously observed a suspicious transaction. Hackers are believed to have attacked the iBTC/aUSD pool.

Acala acknowledged that a problem with the Honzon protocol’s setting impacts the aUSD. The stablecoin loses its peg following a significant network exploit. Earlier this week, the Acala network was the target of an exploit in which the attacker stole 1.2 billion aUSD from the protocol.

The hack caused the aUSD to de-peg, prompting the Acala team to propose several fixes, including a token burn.

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Acala Coin Burn

To keep the peg, the Acala team burned over 1.2 billion aUSD tokens. The peg almost recovered after the token burning, reaching $0.8301 at the time of writing. Dotverse, a community member, considered voting on whether to burn some of the aUSD stablecoin’s coins on August 15.

If the vote were successful, the 1.3 billion aUSD would be returned to the Honzon protocol, effectively burning the money. The community’s support for the currency burn has begun to grow. However, some respondents would like more information before making a decision. The stolen tokens were valued between $0 and $10 million.

As a result, the total amount of recovered currency was most likely close to 1.6 million USD. It is impressive given that stolen cryptocurrency is frequently quickly paid off in DeFi attacks. Security experts are conducting a post-attack investigation to locate the aUSD tokens created by the hacker and then exchanged for other tokens.

Furthermore, liquidity pools may be used to clean up these tokens. The research will also show additional transactions made by the 16 wallet accounts, such as outflows to exchanges, parachains, and other addresses. As a result of such events, Acala’s aUSD stablecoin has completely lost all of its value.

The Acala network has recently been frozen as well. Polkadot will use Acala as a DeFi center, with aUSD serving as the de facto stablecoin for Polkadot and other blockchains. As a result, the project’s stablecoin must be resurrected in order for it to resume operations.

Defi Hacks and Crypto Burns

In the DeFi space, there has a long history of hacking attacks. Several attacks occurred in the previous week, in addition to the one on Acala. Curve Finance, one of the best DeFi exchanges, was hacked early last week, and the attacker stole $570,000 worth of ether from the protocol.

Furthermore, Acala is not the only stablecoin experiencing significant de-pegging. Terra recommended a coin burn as a fix after the value of its TerraUSD stablecoin plummeted sharply in May, similar to this. However, neither strategy was successful, and the asset was eventually destroyed.

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