The Acala Network, which added a USD stablecoin to the Polkadot ecosystem, has been hacked. Due to the exploit, Acala stablecoin has seriously lost its peg as hackers spent more than $1.2 billion per USD. Hacking attacks have become common in recent months, with the recent attack on Nomad Bridge, which wiped nearly $190 million from the network.
Acala aUSD, Polkadot’s de facto stablecoin, was badly affected by this exploit. It lost almost all of its value, falling from $1 to $0.0119 in one go. Security firm PeckShieldAlert has also confirmed that the exploit was leaked by the stablecoin. With the Acala pegged to the USD, its price decline has raised serious concerns in the DeFi market, with traders fearing it could crash.
reason for the unfortunate event
Acala Network’s Twitter handler also confirmed the hack in a tweet, revealing that a configuration issue related to the Honzon Protocol is at the root of the problem. The Honzon protocol is one of the two key protocols used by Acala Network, the other protocol is Homa. The Honzon protocol was applied to improve the liquidity of a USD and its configuration issue seriously impacted the stablecoin’s price and market cap. The Hanzon protocol is inspired by MakerDAO and is sometimes thought of as Polkadot’s MakerDAO.
Additionally, the tweet went on to say that amidst this crisis situation, Acala Network has scheduled an immediate voting session. A decision was made to halt all operations of the Acala network, including withdrawals, potentially stopping drainage.
In addition, the tweet conveyed the information that an investigation into the matter is ongoing to determine the scope of the attack and the amount of property stolen. The tweet also mentioned the word “mitigation,” giving the impression that victim holders might not incur losses at all because the network might be able to mitigate their losses. Hopefully, once the issue is resolved, the network should tweet again, and we can expect the underlying cause of the issue to be revealed at that time as well.
Via the Acala network
Acala is a DeFi network for decentralized finance that provides stablecoin for the Polkadot and Kusama blockchains. It is designed to host a wide range of financial applications using smart contracts, cross-chains and state-of-the-art security protocols. It recently announced its partnership with the Astar network to expand Polkadot’s decentralized finance ecosystem.
Acala network
Together, Acala and Astar networks will join forces to develop multiple cross-chain and liquidity pools. Additionally, the Astar network will connect the Polkadot network to Layer 1 blockchains such as Polkadot and Cosmos. As a result, the problem of lack of blockchain interoperability will be solved and new DApps will be developed using Ethereum Virtual Machine (EVM).
In addition, it will allow developers to use other DApp ecosystems, which will lead to an expanded digital environment. Integrating Acala assets with other ecosystem DApps using ACA and aUSD will improve the connection between the Acala and Astar networks.
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