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Acala Network resumes all operations after wrongly issuing 3 billion stablecoins

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Acala works as an application-specific parachain and aims to be a Polkadot financial hub. (Image: Unsplash/regularguy.eth)

parachain of polkadot focusing on decentralized finance (DeFi), Acala announced this Wednesday (5) the full resumption of its services for users, weeks after a major security incident.

The resumption of operations was announced after the governance body had approved the third and final voting stage of the process.

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“Community Referendum for Stage 3/3 of Resuming Operations Acala was executed. All features of Acala are now working,” the parachain said in a tweet.

Acala works as an application-specific parachain and aims to be a Polkadot financial hub.

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The network offers its own decentralized stablecoin – Acala USD (aUSD) – which can be issued when using tokens as collateral, including polkadot (DOT), kusama (KSM), acala (ACA) and karura (KAR), and placed in staking to generate income.

On the 13th of August, Acala suffered a security exploit as a result of an error in the configuration of a standalone contract (“smart contract”) that controlled a liquidity pool.

The error led liquidity providers to erroneously issue 3 billion aUSD when they cashed out their assets. These providers have repeatedly added more liquidity to receive more aUSD.

About 300 addresses illegitimately removed 3.02 billion aUSD of your wallets. Only a small portion has been transferred to other parachains. The incident resulted in the USD losing parity to the Dollar.

After the incident was detected, the Acala quickly suspended the network through an emergency governance vote. Subsequently, the team froze most of the exploited funds that could be traced on the network. Acala and burned them.

Acala phased resumption

After the token is burned, the team of Acala planned a phased approach to resuming operations, with each phase passing through a governance vote.

In the first phase, the governance body of Acala voted to restart the network on September 26 in the initial phase, allowing users to manage or close out their positions, while advanced services such as oracles and collateralized loans remained off.

These services have now been turned back on, in an attempt to bring Acala back to its state before the configuration error.

The staff told The Block that all 10.9 million aUSD currently outstanding in the portfolios and liquidity pools of Acala remain guaranteed in a 1:1 ratio. The team added that all erroneous emissions of aUSD were recovered in value, except for 5.8 million. This amount was replaced by the team, who used their own funds.

“A series of community governance votes were passed, so much so that all liquidity pools are now recapitalized and rebalanced, and all aUSD in circulation are fully guaranteed”, said the co-founder of AcalaBette Chen, in a statement.

Despite the claim, the Acala stablecoin is trading at $0.96, according to data from website CoinGecko.

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O Money Times publishes informative articles of a journalistic nature. This publication does not constitute an investment recommendation.

Source: Moneytimes

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