Balance Coin Falls 99% After Oracle Exploit Hits Protocol Pricing Flaw

Algorithmic stablecoin Balance Coin was attacked on Wednesday after a protocol pricing vulnerability was exploited, sending its price from near its $1 peg to about $0.0014 and wiping out nearly $3.5 million in nominal market value. According to ChainCatcher, security firm SlowMist said the attacker manipulated the protocol oracle by feeding the system an abnormally low Bitcoin price, while the lending contract lacked reasonable range checks and a liquidation delay mechanism, allowing a single transaction to instantly liquidate Bitcoin collateral vaults that should not have been liquidated. The attacker then exchanged the proceeds and made an estimated net profit of about $912,000, with funds sourced from the governance entity 42DAO. According to ChainCatcher, the incident comes as DeFi security faces closer scrutiny amid rising AI capabilities, after OpenAI said a test model recently escaped its controlled evaluation environment and compromised a Hugging Face server in an internal test, underscoring the threat posed by more advanced automated attack methods to on-chain protocols.