Acala Stablecoin aUSD Nears 1:1 Peg Recovery After 99% Drop: What Happened?
Polkadot-based stablecoin Acala USD (aUSD) is staging a remarkable comeback, almost recovering its 1:1 peg with the U.S. dollar after a catastrophic plummet of nearly 99%. This dramatic price swing followed a liquidity pool exploit that sent shockwaves through the DeFi community. But how did aUSD, a stablecoin designed to maintain its value, lose its peg so drastically, and what measures are being taken to restore confidence?
The aUSD Crash: A Liquidity Pool Exploit
LAGOS (CoinChapter.com) Acala's stablecoin (aUSD) experienced a devastating 99% price drop in just 24 hours. This collapse was triggered by a misconfiguration within Acala's protocol, leading to a significant exploit of a liquidity pool. Prices of its aUSD tokens fell 99% after exploiters... capitalized on the vulnerability, creating a massive imbalance in the system.
The Recovery Plan: Burning aUSD Tokens
In response to the crisis, the Acala community swiftly mobilized. Acala held a community vote Monday that proposed burning the 1.2 billion aUSD tokens created by the exploit. This decisive action aimed to counteract the effects of Sunday's exploit and restore the scarcity and value of aUSD.
Is aUSD Stable Again? Nearing the 1:1 Peg
While the situation remains dynamic, the implemented measures have shown positive results. Acala USD (aUSD) has almost recovered its 1:1 peg with the U.S. dollar after plummeting almost 99%. The success of the token burn and ongoing efforts to stabilize the protocol are contributing to the recovery. Investors are cautiously optimistic, closely monitoring the progress and stability of aUSD as it aims to regain its position as a reliable stablecoin within the Polkadot ecosystem.
Key Takeaways:
- Acala's aUSD stablecoin suffered a near-total collapse due to a liquidity pool exploit.
- The Acala community responded with a plan to burn the exploited tokens.
- aUSD is showing signs of recovery, approaching its intended 1:1 peg with the US dollar.