Balance Coin just lost almost all its value in one shocking move. The stablecoin, which was trading around $1, fell to approximately $0.0024 as attackers targeted a loophole in its pricing mechanism. This is a decrease of over 99%, and it was rapid!

Balance Coin is the token of the decentralized finance (DeFi) platform Balance Protocol. Stablecoins are supposed to hold steady value, so this crash caught traders off guard.

How the Hack Happened

SlowMist security researchers traced the attack back to a price oracle. Oracle provides real-time data on a price to a blockchain system. The oracle in this instance said that there was an abnormally low price of the Binance bitcoin or BTCB.

The attacker took advantage of that unrealistic cheap price to liquidate several BTCB vaults. That’s not normally the kind of vaults that would qualify for liquidation. But they were good enough for the pretzel price. After the attacker got the collateral, they swapped it for other assets and walked away with the profit.

What may be even more alarming is that the entire attack occurred in one transaction. There were no fundamental precautions, including a time lag before liquidation or checking for price volatility.

Nearly $1 Million Lost

According to blockchain security firm PeckShield, the losses are around $915,000. That loss falls on 42DAO, the group that governs Balance Protocol. The project’s own documentation states that the primary support of Balance Coin comes from Bitcoin Cash.

With this hack, there have been numerous DeFi hacks this year. Loose smart contracts, unsafe cross-chain bridges, and substandard protection of admin controls continue to be inviting targets for hackers.

AI is Changing the Game

Hackers are getting smarter every day. Many now bundle a number of small vulnerabilities together to conduct a coordinated attack, rather than targeting one apparent vulnerability. Some are using artificial intelligence to automate the process, identifying vulnerabilities before developers can even identify them by scanning the code.

AI tools are countering those efforts, as security teams battle back. This creates a contest between attackers and defenders, and DeFi users are caught in the middle.

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