- The Balance Coin algorithmic stablecoin plunged by 99.9%.
- Earlier, experts reported that Balance Protocol had been hacked for more than $900,000.
The Balance Coin (BLC) algorithmic stablecoin lost its dollar peg and crashed by 99.9%, according to CoinMarketCap. This was preceded by reports that an attacker exploited a pricing vulnerability in the Balance Protocol.
PeckShield experts were the first to report a potential hack of 42DAO, which manages the project. SlowMist later published a brief incident report.
Notably, Balance Protocol is a DeFi project on BNB Chain built on the same operating principles as MakerDAO. Users deposit BTCB as collateral and receive Balance Coin (BLC) in return, pegged to the dollar. If the collateral value falls below a threshold, the position is automatically liquidated.
The project’s architecture is based on two modules — Spotter and Dog. The first is responsible for recording the collateral price in the system (the poke function). But unlike MakerDAO, it has no OSM (Oracle Security Module), as SlowMist noted. This is a tool that monitors abnormal spikes and introduces a delay in price updates.
The attacker manipulated the BTCB price in the oracle (Median Oracle), forcing Spotter to record an abnormally low price without any checks. Dog, in turn, used the already altered price, also without its own validation. As a result, several BTCB vaults were deemed undercollateralized and instantly liquidated.
In addition, the hacker apparently minted millions of unbacked BLC tokens and dumped them via PancakeSwap V2 for USDT and BTCB.
Total losses are estimated at between $912,000 and $915,000. In addition, Balance Protocol has accumulated a significant amount of bad debt.
At the time of writing, Balance Coin is trading at $0.007, according to CoinMarketCap. The asset’s supply stood at $3.5 million.
As a reminder, we previously reported on the hack of the Allbridge Core bridge. You can read more about the incident, as well as comments from the project’s co-founder, in a separate article.
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