Acala Community Burns Token For Repeg Of aUSD Stablecoin

The Acala community has burned around 1.3 billion aUSD tokens to restore the peg of the stablecoin with the U.S. Dollar. These tokens were erroneously minted following an attack on the DeFi hub of Polkadot.

The attacker reportedly took the advantage of a vulnerability in the Honzon protocol, which is responsible for the aUSD token. As a result, around 1,292,860,248 aUSD tokens were erroneously minted.

Due to an increase in the supply of the stablecoin, the peg to $1 was lost and aUSD dropped significantly. However, the stablecoin almost regained its peg only to lose it once again after dropping by 99%, as per CoinMarketCap's data.

As of 11:46 p.m. ET Monday, the price of 1 aUSD was $0.009954, significantly down from its required price of $1.

"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," Acala shared on Twitter at 10:06 p.m. ET Monday.

The DeFi platform also confirmed that the funds haven't left the Acala parachain as swapping and transferring features have been halted. Because of this, the attackers failed to steal the funds.

Now that the aUSD tokens have been tracked and burned, the attackers' wallet only contains a few other tokens, which were swapped from aUSD in an attempt to withdraw them but failed.

"More trace reports are underway to identify erroneously minted aUSD which have been swapped to other tokens or added to liquidity pools, and to identify other relevant txs [transactions] performed by the 16 wallet addresses and token outflows to other addresses, parachains, & exchanges," another tweet from Acala revealed.

Once the trace reports are out, it will be completely up to the Acala community to "collectively formulate proposals following each trace report to resolve the error minting of aUSD, the state of liquidity pools, and then gradually resume paused network operations."