Acala’s stablecoin aUSD, the “decentralized stablecoin of Polkadot” has lost its stablecoin status as it has depegged from the US dollar – now trading at around $0.85 but having dropped to almost $0.50.
In a series of Tweets, Acala claimed the fall in value was due to a “configuration issue.” Meanwhile, some on Twitter are wondering if aUSD is the next LUNA/TerraUSD. The Acala Dollar is a rather small stablecoin in regards to market cap and utilization
Dr Martin Hiesboeck, Head of Blockchain and Crypto Research at Uphold – a digital asset trading marketplace, distributed the following comment on aUSD losing its peg:
“As we are going to press, news emerged that Polkadot’s stablecoin aUSD by Acala depegged in what seems to be another exploit. aUSD is currently trading at $0.53. Yet another “stablecoin” going unstable is not good. The promise of decentralized finance is slowly being eroded by cybersecurity incompetence. The logical outcome is regulated finance setting the rules.”
The stablecoin market is in dire need of explicit regulation and events such as this tend to incentivize regulators and policymakers, while diminishing the credibility of projects that fail to maintain their claims.
Meanwhile, Acala works to sort out the aUSD mess or misconfiguration.
Incident trace report #1: This is the 1st published batch of trace results. The 1.288B erroneously minted aUSD have been identified and their transfers are disabled until a pending Acala community governance decision resolves the error.
— Acala (@AcalaNetwork) August 15, 2022
Earlier today a misconfiguration was found on Acala’s iBTC/aUSD liquidity pool which resulted in erroneous mints of significant amounts of aUSD.
— Polkadot (@Polkadot) August 14, 2022
Update: Acala Dollar now trading at less than one penny so there is some work to do here.