Update July 22 at 4:37 am UTC: The article has been updated to include additional information from Slowmist about the exploit method.
Balance Coin, an algorithmic stablecoin designed to maintain a peg to the US dollar, has fallen more than 99% following a reported exploit.
Balance Coin, the native stablecoin of Balance Protocol, is trading at $0.001358 at the time of writing, down from $0.9954, according to CoinMarketCap.
Blockchain security firm SlowMist said the exploit stemmed from an attacker manipulating an “abnormally low” Binance Bitcoin (BTCB) oracle price, letting the attacker liquidate collateral in multiple BTCB vaults that should not have been liquidatable, then swapping the extracted assets for profit.
“A single-transaction combo exploited the missing price protection and liquidation delay in Maker-style system, allowing an attacker to liquidate multiple BTCB vaults using an abnormally low oracle price and profit from the arbitrage,” SlowMist said.
The incident adds to a string of DeFi exploits this year, with attackers continuing to target smart contract flaws, compromised admin controls and bridge vulnerabilities to siphon funds from onchain protocols.
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Blockchain security firm PeckShield said the exploit has caused $915,000 in losses to 42DAO, the governance entity for the Balance Protocol.
Balance Protocol is a DeFi project that offers the USD-pegged Balance Coin, which is primarily backed by Bitcoin Cash, according to its GitBook.
Cointelegraph reached out to 42DAO for comment.
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