Network and token freeze after Acala exploit raises questions

The Acala hack saw over a billion aUSD stablecoins minted from nothing, but now community members are getting scratch their heads wondering how a decentralized protocol would handle cleaning.

The Acala network's stablecoin aUSD depleted by more than 99% over the weekend and forced the Acala team to pause a hacker's wallet, raising concerns as to its claim to be decentralized.

On Sunday, a hacker took advantage of a bug in the iBTC/aUSD liquidity pool that resulted in the minting of 1.2 billion aUSD without collateral. This event caused the US dollar-pegged stablecoin to drop to one cent, and in response, the Acala team froze the mistakenly minted tokens by placing the network into maintenance mode.

The move also halted other features such as swaps, xcm (cross-chain communications on Polkadot), and oracle palette price feeds until "further notice".

We identified the issue as a misconfiguration of the iBTC/aUSD liquidity pool (which went live earlier today) which resulted in typing errors. 'a significant amount of aUSD1/

While the decision to put the network in maintenance mode and freeze funds in the hacker's wallet may have been intended to protect users and the network from further harm, proponents of decentralization have cried foul .

Acala is a cross-chain decentralized finance (DeFi) hub that issues the aUSD stablecoin based on the Polkadot blockchain. aUSD is a crypto stablecoin that Acala claims is censorship-resistant. iBTC is a form of Wrapped Bitcoin (wBTC), which can be used in DeFi protocols.

Community members have noted the irony of Acala's claims regarding aUSD's resistance to censorship since the protocol freeze...