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Following
MAPO Balance Coin suffered a cliff-like decline due to a suspected BNB Chain vulnerability attack.
The stablecoin market once again suffered major turmoil, and the value of the algorithmic stablecoin Balance Coin (BLC) on BNB Chain plummeted by more than 99%. The cliff-like decline stems from a suspected security breach involving decentralized organizations 42DAO and GemJoin, which caused the BLC to plummet from a stable anchor price of US$1 to just US$0.001209 on July 22.
What are the incentives for the massive sell-off in BLC?
Blockchain security company PeckShield was the first to disclose the incident, and the attack is expected to cause financial losses of approximately US$915,000. TenArmor, which focuses on blockchain analysis, detected two unusual transactions related to 42DAO and GemJoin, which directly led to the crash. The first transaction generated approximately 4.5 million BLC tokens, which were quickly sold off through the decentralized trading platform PancakeSwap V2.
How does the vulnerability attack unfold?
About two hours after the first attack, a follow-up transaction appeared, using a similar method to minted another 5900 BLC tokens. These newly minted coins were quickly sold, further exacerbating selling pressure on the market as they immediately entered the liquidity trading pool.
The surge in unauthorized BLC tokens led to a significant increase in supply, triggering huge selling pressure, causing the value of the stablecoin to fall significantly below its set stable price. The 42DAO lacked detailed incident analysis reports after the event, making the technical reasons and the specific extent of losses still unclear. At the same time, both BLC holders and participants in the broader Balance Protocol system face uncertainty before the full survey results are released.
The attacker gained the ability to mince new tokens and quickly sold them, creating strong downward pressure, causing a loss of more than 99% of the value of the BLC. Due to the limited information publicly disclosed by the core team of the agreement, the specific technical root cause of this vulnerability attack has not yet been clarified.
This incident is exactly the same as previous similar cases in the field of decentralized finance (DeFi). For example, in May this year, the cryptocurrency MAPO was attacked due to a bridging vulnerability, allowing attackers to minte unauthorized tokens and liquidate them, causing its value to plummet by 96%.
Unauthorized tokens were minted and immediately liquidated, causing market instability. This incident further confirms the vulnerability attack pattern in the DeFi ecosystem and highlights major risks. Security assessment and vulnerability management remain critical in the DeFi space to avoid future losses.
The ongoing vulnerability related to unauthorized casting poses a significant threat to the DeFi protocol and its participants, allowing attackers to create tokens that exceed supply limits, sell quickly and cause severe market shocks. Strengthening security measures and transparency is crucial to preventing such attacks.
