Another depeg - Acala trace report reveals 3B aUSD minted by mistake

As the dust settles on yet another decentralized finance exploit, Acala continues to trace tokens that were mistakenly created after misconfiguration in a newly launched liquidity pool.

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High-profile security incidents continue to be a theme in 2022 as the Acala Network joined a long list of platforms hit to fall prey to exploits.

Acala's aUSD token, which acts as a native stablecoin for the Polkadot and Kusama blockchains, saw its value plummet by 99% after a misconfiguration of the iBTC/aUSD liquidity pool was exploited after launch August 14. Initial estimates from Acala noted that 1.2 billion aUSD was minted without the necessary collateral – seeing the value of the token drop from its 1:1 USD ratio to a low of $0.01.

Acala put its network into maintenance mode to freeze funds and eventually managed to recover a significant portion of the unsecured tokens. The Acala community proposed and voted for a referendum to identify and destroy the mistakenly minted tokens to bring its USD peg back to parity at $1.

A referendum on community governance was proposed and adopted. At block 1652829 approx. 35 minutes, 1,292,860,248aUSD in total minted in error will be returned to Honzon Protocol and will be burned.

Details in the thread below:

— Acala (@AcalaNetwork) August 16, 2022

1,288,561,129 aUSD minted on 16 specific accounts was sent back to the network's Honzon protocol to be burned. Another 4,299,119 mistakenly minted aUSD remaining in the iBTC/aUSD reward pool were also destroyed.

As the cryptocurrency community questions whether the Acala network made the right decision to essentially freeze its network, the stablecoin was able to be reinstated on short notice, with the community playing its part in the chosen path to undo the feat.