Balance Coin stablecoin falls 99% after oracle manipulation

The algorithmic stablecoin Balance Coin has fallen more than 99% following a reported exploit, as detailed in an update on July 22. The token, native to the Balance Protocol, dropped from $0.9954 to $0.001358, according to CoinMarketCap.

Blockchain security firm SlowMist attributed the exploit to an attacker manipulating an “abnormally low” Binance Bitcoin (BTCB) oracle price. This allowed the attacker to liquidate collateral in multiple BTCB vaults that should not have been liquidatable, then swap 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.

Consequently, PeckShield reported that the exploit caused $915,000 in losses to 42DAO, the governance entity for the Balance Protocol. The protocol offers a USD-pegged stablecoin primarily backed by Bitcoin Cash, according to its documentation.

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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