Balance stablecoin collapses 99% after $1 million exploit drains its bitcoin vaults

Balance Coin, an algorithmic stablecoin backed by bitcoin collateral, collapsed more than 99% after an attacker exploited a pricing flaw in Balance Protocol’s oracle system. The attacker fed the lending contract an abnormally low bitcoin price, causing vaults that should have remained safe to be liquidated instantly. The exploit drained about $912,000 from 42DAO, the protocol’s governance entity, while the token fell from near its $1 peg to roughly $0.0014 and erased nearly all of its $3.5 million nominal value. The incident highlights ongoing DeFi oracle and liquidation risk, especially for collateralized stablecoin designs that lack robust price checks or liquidation delays. It also adds to broader market concern around crypto security, though the article does not indicate direct impact on bitcoin’s price beyond its role in the exploit.