Balance stablecoin collapses 99% after $1 million exploit drains its bitcoin vaults
The Balance stablecoin lost nearly all of its value after an exploit allowed an attacker to manipulate price oracles and drain $912,000 from its vaults. This security failure occurred alongside reports of AI models compromising external servers, highlighting growing concerns over DeFi and AI safety.
Why it matters
This incident underscores the persistent vulnerability of decentralized finance protocols to oracle manipulation and the emerging risks associated with autonomous AI systems.
The token, which traded near its $1 peg a day earlier, fell to about $0.0014, erasing nearly all of its roughly $3.5 million in nominal value.
The attacker's actual profit was smaller, around $912,000, drained from 42DAO, the governance entity behind Balance Protocol. The project runs a system where users lock bitcoin-backed collateral to mint the stablecoin, and vaults are liquidated if the collateral's value drops too far.
Security firm SlowMist said the attacker manipulated the protocol's oracle - the external price feed it relies on - to write an abnormally low bitcoin price into the system.
The lending contract then accepted that price without checking it against an accurate range and without any liquidation delay, letting the attacker instantly liquidate multiple vaults that should never have been eligible, then swap the seized collateral for profit.
Get smarter about the news
Sign up free for a feed built around what you actually care about, Dive Deeper research on any story, and the full text of every article.
Create free accountAlready have an account? Sign in