Update July 22 at 04:37 UTC: SlowMist provided additional details about the exploit method.
Balance Coin, the algorithmic stablecoin native to Balance Protocol that aims to maintain a USD peg, collapsed more than 99% after a reported exploit. The token was trading around $0.001358, down from roughly $0.9954, according to CoinMarketCap.
Blockchain security firm SlowMist said the attacker manipulated an abnormally low Binance-pegged Bitcoin (BTCB) oracle price. That low price allowed the attacker to liquidate multiple BTCB vaults that should not have been liquidatable and to extract and swap the assets for profit. SlowMist described the incident as a single-transaction combo that exploited missing price protection and a liquidation delay in a Maker-style system, enabling the attacker to profit from the arbitrage.
PeckShield reported the incident cost 42DAO, the governance entity for Balance Protocol, about $915,000. Balance Protocol issues Balance Coin as its USD-pegged token, which the project says is primarily backed by Bitcoin Cash according to its GitBook.
The event is the latest in a series of DeFi attacks this year, where attackers have repeatedly exploited smart contract flaws, compromised admin controls, and bridge vulnerabilities to drain funds from on-chain protocols.
Cointelegraph has reached out to 42DAO for comment. Cointelegraph is committed to independent, transparent journalism and encourages readers to verify information independently in accordance with its Editorial Policy.