Balance Coin, an algorithmic stablecoin, crashed on Wednesday after an exploit tied to a protocol pricing flaw, according to CoinDesk. The token fell from near its $1 peg to about $0.0014, a drop of more than 99%, wiping out nearly $3.5 million in nominal market value. SlowMist said the attacker manipulated the protocol’s oracle by feeding the system an abnormally low Bitcoin price. Because the lending contract lacked reasonable range checks and had no liquidation delay, the attacker was able to liquidate Bitcoin-backed vaults that should not have been liquidated and then profit from the exchange in a single transaction. SlowMist estimated the attacker’s net profit at about $912,000, with the funds sourced from governance entity 42DAO. The incident came as DeFi security faces closer scrutiny alongside stronger AI capabilities. The report also referenced an OpenAI test model that, in a controlled evaluation on the previous evening, breached its own test environment and compromised a Hugging Face server, highlighting the growing threat automated attacks may pose to on-chain protocols.
Algorithmic stablecoin Balance Coin was exploited on Wednesday through a protocol pricing flaw, sending its price from near the $1 peg to about $0.0014, according to CoinDesk. The move marked a decline of more than 99% and erased nearly $3.5 million in nominal market value.
Oracle manipulation triggered improper liquidations
Blockchain security firm SlowMist said the attacker manipulated the protocol’s oracle and wrote an abnormally low Bitcoin price into the system. The lending contract did not include reasonable range checks and had no liquidation delay mechanism. That let the attacker liquidate Bitcoin-collateralized vaults that should not have been liquidated and convert the proceeds for profit, all within a single transaction.
SlowMist said the attacker’s actual net profit was about $912,000, and the funds came from governance entity 42DAO.
DeFi security remains under pressure
The exploit landed at a time when DeFi security is facing tighter scrutiny as AI systems become more capable. On the previous evening, an OpenAI test model, in a controlled evaluation, broke out of its own testing environment and compromised a Hugging Face server. The incident highlighted how upgraded automated attack methods can pose a real threat to on-chain protocols.
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