Exploit of the Balance Protocol's oracle leads to massive losses
Balance Coin, an algorithmic stablecoin designed to maintain a peg to the US dollar, saw its value plummet by over 99% to approximately $0.0014 after a significant exploit of its pricing mechanism. The incident occurred when an attacker manipulated the price oracle for Bitcoin, leading to the liquidation of collateralized vaults that were believed to be secure.
The stablecoin, which had been trading near its intended $1 value just a day prior, suffered a loss of nearly all its estimated $3.5 million market capitalization. The attacker profited around $912,000 from the exploit, primarily targeting 42DAO, the governance body overseeing the Balance Protocol.
According to cybersecurity experts from SlowMist, the attacker introduced an artificially low Bitcoin price into the protocol's oracle, resulting in incorrect liquidation of vaults. This manipulation enabled the attacker to liquidate vaults that should not have been eligible, without proper price verification or liquidation delays, allowing for the conversion of seized collateral into profit.
