Acala announces ‘path to resuming operations’ after aUSD breach

on Sep 23, 2022
  • Acala Foundation says all liquidity pools are ‘re-capitalised and rebalanced’ and aUSD fully collateralised.
  • The team at the Polkadot parachain recommends a phased approach, with step 1 involving liquidity providers.
  • Other operations and oracles will follow in phase 2 and 3 respectively.

Acala, a decentralised finance network that powers the crypto-backed aUSD stablecoin ecosystem, is “ready to resume its operations,” the platform announced on Friday.

In August, the Acala community voted to pause network operations after a breach on aUSD saw the stablecoin depeg.

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Acala ‘ready’ after aUSD error mint

An error in the minting of the token, which serves as the native stablecoin on Polkadot, had seen more than 3 billion aUSD erroneously minted – with the incident leading to liquidity provider actions that aided the eventual depegging of the decentralised stablecoin.

The community quickly adopted various governance votes to pause multiple operations, which included its DEX, incentives pallet, oracle pallet, redeem, and non-ACA token transfers.

But today, the Acala team said the network was poised to resume operations. Acala co-founder and COO Bette Chen wrote in a Medium post:  

“Since the Acala aUSD error mint incident on 14/08/2022… a series of community governance votes have been passed, such that all liquidity pools are now re-capitalized and rebalanced, and all aUSD in circulation are now fully collateralized. The Acala network is in a state where it’s ready to resume operations.”

Crypto market conditions and prices have changed significantly since the incident, and the Acala team realises the impact this might have on liquidity providers. As such, the recommendation is to have network operations resume in three phases:

Phase 1 will see LPs allowed to withdraw from pools while phase 2 will enable all operations such as trading, incentives pallet and LDOT instant redeems. Oracles will then be enabled in phase 3.

Acala Foundation says that it is still working with law enforcement, and other partners as it tries to recover all the aUSD and swapped tokens resulting from the error mints.

A 5% bounty also remains in place to anyone who returns funds they may have received erroneously due to the exploit.

At the moment, and as it looks to resume operations, the foundation notes that some assets remain frozen on-chain following community governance votes. There are also assets frozen in multiple CEXs.

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