Algorithmic stablecoin Balance Coin lost its peg sharply on July 22 after a suspected security incident, falling from about $0.9954 to $0.001358, a drop of more than 99%. Blockchain security firm PeckShield said the depeg was tied to an attack that cost roughly $915,000 at 42DAO, the decentralized autonomous organization tied to governance of the Balance Protocol ecosystem and its BLC token. Separately, security firm TenArmor said it had detected suspicious attack activity on BNB Chain involving GemJoin and 42DAO. As of now, the project team has not released a detailed explanation of the incident or outlined any follow-up response. The event adds another case of an algorithmic stablecoin breaking its peg after a security issue, though the precise cause has not yet been disclosed by the project.

SlowMist said the attack on 42DAO stemmed from an abnormally low BTCB price reported by the Median Oracle, which the attacker used to trigger liquidations through the protocol’s Spotter and Dog modules. According to the security firm, the Spotter module’s "poke" function wrote the faulty price directly into the Vat account because it lacked price deviation checks, maximum drawdown limits, and a minimum price protection mechanism. The Dog module then used that updated spot price to immediately liquidate multiple BTCB vaults through its "bark" function, without any liquidation delay or oracle price validation in place. SlowMist said the attacker was able to profit from arbitrage through that sequence. Foresight News had earlier reported that Balance Coin, or BLC, the native algorithmic stablecoin incubated and used by 42DAO, was hit in the incident. BLC fell 99%, and 42DAO’s losses were about $915,000.

Blockchain security firm PeckShield said 42DAO’s native algorithmic stablecoin, Balance Coin (BLC), was hit by a hack. According to PeckShield’s monitoring, the incident sent BLC down 99% and left 42DAO with losses of about $915,000. The source material did not provide more detail on how the attack was carried out, when the exploit began, or what response measures may have followed. The reported figures are limited to PeckShield’s monitoring update, which identified the affected asset as BLC, described it as a native algorithmic stablecoin incubated and used by 42DAO, and quantified both the price collapse and the estimated losses. No additional on-chain data, attacker identity, or recovery status was disclosed in the input.

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