Balance Coin plunged more than 99% in a single day after an exploit hit Balance Protocol, with on-chain data showing the token falling from nearly $1 the previous day to about $0.0014 on Wednesday.
The move nearly wiped out the algorithmic stablecoin’s market value and highlighted how dependent DeFi protocols remain on secure oracle infrastructure. The attack resulted in about $912,000 in stolen assets.
Price collapse erased most of the token’s nominal value
Balance Coin is a small algorithmic stablecoin that was designed to maintain a $1 price through protocol mechanisms instead of fiat reserves.
After the attack, the token dropped from near $1 to roughly $0.0014, a decline of more than 99%. That move almost wiped out about $3.5 million in nominal market capitalization.
While several million dollars in token value disappeared, the attacker’s actual gain was estimated at about $912,000. The stolen assets came from 42DAO, the governance organization behind Balance Protocol.
The exploit targeted an oracle weakness and triggered false liquidations
Balance Protocol uses a Bitcoin-collateralized minting model. Users can post Bitcoin as collateral to mint the Balance stablecoin. If the collateral value falls below the safety threshold, the system begins liquidation and sells the collateral to keep the protocol stable.
Blockchain security firm SlowMist said the attacker exploited an oracle flaw and artificially pushed the protocol’s Bitcoin price feed down to an abnormal level.
The lending contract’s protections failed at the critical moment. It did not compare the abnormal quote against a real market price range, and it had no liquidation delay mechanism. As a result, the protocol accepted the false quote and marked a large number of otherwise safe collateral positions for liquidation.
That allowed the attacker to force the liquidation of multiple Bitcoin vaults that should not have been liquidated, then sell the seized collateral. Initial estimates put the arbitrage profit from the attack at about $912,000.
Incident puts oracle design and DeFi risk controls back in focus
The episode points to ongoing risks in oracle design, risk controls, and liquidation procedures across DeFi protocols. Because oracles are core infrastructure for on-chain finance, manipulated price inputs can lead to wrongful liquidations, asset losses, and stablecoin depegging.