Balance Protocol price oracle attacked; algorithmic stablecoin BLC token price plunges 99%

According to CoinDesk, algorithmic stablecoin Balance Coin (BLC) suffered a major blow on Wednesday, with its price collapsing by more than 99%. It fell from its original $1 peg to around $0.0014, wiping out nearly $3.5 million in nominal value.

The crash was not caused by normal market volatility, but by attackers exploiting a pricing vulnerability in Balance Protocol. They manipulated the Bitcoin price oracle to carry out a carefully planned attack.

In simple terms, the attackers used a protocol flaw to feed the system a false and abnormally low BTCB oracle price, which then triggered improper liquidation of collateral positions in the vault.

Because the lending contract did not set validation ranges for price accuracy and did not configure any liquidation delay mechanism, the attackers were able, in a single transaction, to liquidate multiple collateral positions that should not have been liquidated.

Analysis by security firm SlowMist shows that, through this method, the attackers profited about $912k, and these funds mainly came from Balance Protocol’s governance entity, 42DAO.

It is worth noting that Balance Protocol runs a system where users lock Bitcoin collateral to mint stablecoins; when the collateral value drops too much, the vault is automatically liquidated by the protocol.

This attack happened during a period when DeFi security is facing increasingly strict scrutiny, and it also exposed serious flaws in the system’s price validation mechanism.

Especially amid the continuous improvement of AI system capabilities, these kinds of attack methods could become more complex and harder to detect, bringing unprecedented security challenges to the cryptocurrency sector.

In summary, this oracle attack once again serves as a warning to the DeFi industry: when project teams pursue innovation, they cannot ignore protocol security, and traditional protective mechanisms are increasingly unable to deal with more complex attack techniques.

Only by putting security first and building a multi-layered defense system—including strict price validation, reasonable liquidation delays, and continuous security audits—can DeFi achieve the vision of decentralized finance and earn users’ long-term trust.

#DeFi protocol attack