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Balance stablecoin crashes 99% after bitcoin-oracle exploit triggers liquidations

The attacker netted about $912,000 by driving Balance Protocol vault liquidations using an abnormally low bitcoin price from the protocol’s oracle.

Reported · Written up by our desk · Stablecoins

Balance Coin, an algorithmic stablecoin intended to hold a $1 peg, crashed more than 99% to about $0.0014 after an attacker exploited a pricing flaw in its protocol, according to CoinDesk and blockchain data. The token had been trading near its peg a day earlier, and the move erased nearly all of its roughly $3.5 million nominal value.

CoinDesk reports the attacker manipulated Balance Protocol’s bitcoin price oracle, which is the external price feed the system relies on. That incorrect low bitcoin price caused improper liquidations of collateralized vaults, which were then netted by the attacker through a single transaction.

The exploit drained about $912,000, largely from 42DAO, the governance entity behind Balance Protocol, CoinDesk said. The protocol uses bitcoin-backed collateral that can be liquidated if collateral value falls too far, but the report says the lending contract accepted the manipulated oracle price without checking it against an accurate range and without a liquidation delay.

CoinDesk added that the attack arrives amid heightened concern about DeFi security as AI systems become more capable, citing broader risk discussions in the sector, including a recent controlled test involving OpenAI models compromising Hugging Face servers.

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