After a smart contract exploit that plummeted the token’s value, a new governance vote looks to bring aUSD back to its peg.
Polkadot-based DeFi platform Acala’s native stablecoin aUSD is edging back to its dollar peg following the community’s vote to destroy 1.29 billion aUSD.
These tokens were minted following an exploit of a “misconfiguration” in one of Acala’s liquidity pools. Once attackers exploited the flaw, the mass minting of the stablecoin plummeted its value.
The coin de-pegged and dropped to a new all-time low of $0.0054 on August 14.
However, the stablecoin has since pumped 10,158% over the past 24 hours and is now trading at $0.92, according to data from Coingecko.
The recovery comes amid a new burn scheme that the Acala community voted on yesterday.
The proposal sought to burn the 1.29 billion aUSD tokens held by 16 wallet addresses involved in Acala’s newly-launched iBTC/aUSD liquidity pool smart contract exploit.
Roughly 95% of voters unanimously accepted the proposal, and a meager 5% opposed it. Following its acceptance, the proposal was executed earlier today.
“The recently passed community governance referendum has now been executed,” tweeted Acala at 2 AM UTC. “1,292,860,248 erroneously minted aUSD have been returned to the honzon protocol and burned.”
The burn event helped aUSD regain its dollar peg rapidly.
The recently passed community governance referendum has now been executed.
1,292,860,248 total erroneously minted aUSD have been returned to the honzon protocol and burned.
Details in thread below ⤵
— Acala (@AcalaNetwork) August 16, 2022
According to a trace report, nearly 99% of the erroneously minted aUSD that remained on Acala were burned from exploiters' wallets.
The remaining 1% were swapped or moved to other parachains. The team is still in the process of recovering them.
99%+ of erroneously minted aUSD remain on the Acala parachain with a small proportion transferred out from Acala. To contain the error minted aUSD, urgent gov votes were passed to pause honzon protocol, xcm, EVM, non-ACA token transfers, oracle pallet, & LDOT instant redeem
— Acala (@AcalaNetwork) August 15, 2022
Acala parachain also remains paused.
Acala network pause divides community
Depite reverting the mass-minting of aUSD, many in the Acala community raised concerns around the project’s ability to pause the parachain amid the chaos.
A parachain is an independent blockchain built on Polkadot that’s interoperable with any other parachain in the network.
“I realize that this is done with good intent, but this is a slippery slope,” a Twitter user raising concerns surrounding Acala’s operations tweeted.
“I agree it is a good thing to fix the problem hurting normal users and not letting the hackers get away with anything; that being said, I also don't want to see some proposal to take my or any other normal user's money or rights by the voting of some crowd,” said a user on Acala’s discord.
Decrypt has reached out to Acala for comments on “centralization” concerns.