KuCoin Identifies Inaccurate Information in Acala’s Community Proposal

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Acala – one of the first Polka­dot parachains – recent­ly rolled out a yield-bear­ing liq­uid­i­ty pool for aUSD and a form of wrapped bit­coin, which con­tained a bug that was soon exploit­ed by the hack­ers result­ing in 1.2 bil­lion aUSD being mint­ed with­out collateral.

This week, the pro­to­col launched a report detail­ing the exploit along with a pro­pos­al to recov­er bil­lions of dol­lars worth of aUSD. But KuCoin has alleged that much of the impor­tant infor­ma­tion relat­ed to the CEX in the report and the pro­pos­al is inaccurate.

Flawed Numbers

Accord­ing to KuCoin’s lat­est state­ment, the total num­ber of aUSD error mints sent to the exchange is 8.03 mil­lion, rather than 4.937 mil­lion, as detailed in the com­mu­ni­ty pro­pos­al. It fur­ther not­ed that the total num­ber of aUSD error mints trad­ing on the exchange was incor­rect­ly men­tioned as 1 mil­lion instead of 5.33 million.

KuCoin said that if the cur­rent pro­pos­al with alleged flawed data has been exe­cut­ed, it means that more than 4.33 mil­lion aUSD tokens that were held by the token hold­ers will be frozen and even burnt. The plat­form added that this may lead to “tremen­dous dam­age” to the Acala com­mu­ni­ty as well as the price of the token.

It sug­gest­ed the Acala team recon­sid­er its community’s pro­pos­al and went on to add,

“Giv­en the sig­nif­i­cant dif­fer­ence in the amount of aUSD error mints deemed nec­es­sary to re-col­lat­er­al­ize, it is sug­gest­ed that the Acala com­mu­ni­ty recon­sid­er the cur­rent pro­pos­al togeth­er with the Acala Foun­da­tion. In the inter­ests of pro­tect­ing users, KuCoin is will­ing to con­tin­ue to pro­vide sup­port to the Acala com­mu­ni­ty and the Acala Foun­da­tion. And with our joint efforts, we hope the inci­dent can be resolved soon while ensur­ing that no inno­cent user suf­fers any loss.”

Acala Sparks Decentralization Debate

The exploit trig­gered a crash of Acala Network’s aUSD sta­ble­coin that soon depegged by over 99%. In response, the team froze the erro­neous­ly mint­ed tokens by plac­ing the net­work in main­te­nance mode to pro­tect users and the net­work from fur­ther dam­age. The move sub­se­quent­ly paused oth­er fea­tures as well, includ­ing swaps, xcm (cross-chain com­mu­ni­ca­tions on Polka­dot), and the ora­cle pal­let price feeds.

But this did not sit well with decen­tral­ized pro­po­nents, many of whom ques­tioned how decen­tral­ized Acala real­ly is if it could prompt­ly freeze funds.

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