Yala's Bitcoin-backed stablecoin YU faced stability challenges following an attack that impacted its dollar peg.
Overview of the Incident
Yala’s YU stablecoin lost its dollar peg following an incident that occurred on Sunday. The Yala team confirmed the situation in a post, noting that it briefly impacted the token's price, which plummeted to $0.2046. The team assured that all funds are safe and that they are working with SlowMist and other security partners to investigate the breach.
Actions of the Attacker
According to blockchain analytics firm Lookonchain, the attacker exploited the Yala protocol by minting 120 million YU tokens on Polygon (MATIC). They then bridged and sold 7.71 million YU for 7.7 million USDC across Ethereum and Solana. The attacker converted the USDC into 1,501 ETH and dispersed the funds across multiple wallets.
Stablecoin Market Analysis
YU, backed by overcollateralized Bitcoin reserves, was designed to maintain a $1 peg. However, its current market cap stands at $119 million, with only $340,000 in USDC liquidity in its Ethereum pool. Despite recovering slightly to $0.7869, YU is still under pressure and struggling to restore its former price.
The future outlook for YU remains uncertain as the Yala team continues to work on mitigating the effects of the attack and restoring the token’s stability.
