Alcala developers almost killed their own project by mistake, now they are resurrecting it with the help of the community.
Some blockchain projects have to deal with hackers and others, like Alcala, have to deal with their own developers. A “human error” a few weeks ago almost killed the entire project. However, thanks to the joint efforts of the community and developers, the problem has been resolved—should.
On September 26, the Acala network announced the reactivation of its operations after having recovered $2.970 million of the $3.022 million its team mistakenly printed in August.
The community referendum for Phase 1 of Acala’s resumption of operations has been approved and executed.
LPs that choose to burn LP tokens or withdraw liquidity on Acala now have the option to do so. https://t.co/yzvOz7zwxT
Acala (@AcalaNetwork) September 26, 2022
According to Acala, the community voted to keep the network up and running after burning most of the total ($2.7 billion) of printed tokens.
A very expensive mistake
On August 15, DeFi platform Acala published a report explaining how it mistakenly printed over 3 billion of its stablecoin aUSD, causing it to crash instantly. At that point, aUSD plummeted more than 99%, hitting prices below $0.01 per coin.
Search results for phase 2 + summary below. A total of $3,022 billion in aUSD errors were confirmed by 16 addresses. Acala’s #21 referendum burned ~1,292B. 1.682 billion aUSD errors in iBTC/aUSD LP tokens, obtained after the crash, remain on 16 Acala addresses. https://t.co/8MTBinhrVP
Acala (@AcalaNetwork) Aug 17, 2022
Due to the issue, the network has decided to stop swaps, cross-chain communications on Polkadot and oracles, among other considerations. The team also said operations will be resumed “safely and gradually” once the bug is resolved and US dollar parity is restored.
“In order to accommodate the mismined aUSD, emergency governance votes were adopted to suspend the horizon protocol, xtoken (move xcm out), EVM, non-ACA token transfer, oracle pallet and redemption Instant LDOT.”
Since then, the network has gone into maintenance mode that freezes user funds to revoke insecure tokens. The community then voted to identify and destroy the misprinted tokens, which restored activity despite the fact that aUSD remained at $0.77, a far cry from the $1 reference. la suitable.
Alcala and the status of aUSD to date
According to the latest Acala report, the network has a total circulating supply of 10,961,589, aUSD. Of which, a total of 5,837,712 aUSD has been decentralized by the Acala Foundation.
Additionally, the protocol managed to recapitalize and rebalance Acala Swap’s liquidity pools to pre-crash levels, thanks to the support of the Alcala platform, which donated 2,489,614 ACA, 80,853 DOT, 0.164 iBTC, 995.020 INTR, 530,700 LDOT.
“As all aUSD in circulation is now collateralized and the liquidity pools recapitalized and rebalanced, the Acala network is poised to resume normal operations.”
However, some assets remain frozen by the community vote, while others are locked in a handful of centralized exchanges (CEXs) that have aided the aUSD recovery effort. Acala even offers a bonus of up to 5% for users who return money related to the incident.
Centralization vs Decentralization
Although the Alcala team acted quickly, they still had to freeze user funds to keep the situation under control. This contradicts the censorship-resistant decentralized nature of the protocol.
Although Acala’s decision has been criticized by some users on social media, the collapse of another stablecoin, such as aUSD, could cause chaos for the crypto market, given its precedent. UST and LUNA.
I think it will have to move to Governance to become “decentralized” finance (DeFi). If Acala centrally controls that decision, is this really DeFi?
Gr33nHatt3R.dot (@ Gr33nHatt3R) August 14, 2022
Although Acala is back up and running on its network, it is now up to Acala to work to regain the trust of its users. And that is sometimes harder than coding a smart contract.