The Acala parachain project team of the Polkadot ecosystem returned the 2.97 billion aUSD stablecoin issued as a result of the exploit.

The incident occurred due to an error in the Acala smart contract, which manages the iBTC/aUSD liquidity pool. The error allowed 16 addresses to mint more than 3 billion stablecoins.

As a result of the initial follow-up, the Acala team traced the $1.29 billion erroneously minted by 16 addresses. The assets are blocked until decided by the community.

Incident monitoring report #1: This is the first set of monitoring results published. Accidentally minted 1,288B aUSD were identified and their transfers disabled until a pending Acala community management decision resolves the error.

Topic below: https://t.co/KazsYLxzqK

— Acala (@AcalaNetwork) 15 August 2022

To speed up a possible response to the incident, the developers submitted a proposal to reduce the voting time from five days to one day and reduce the validity period to eight hours.

The 23rd Referendum (a runtime upgrade to speed up Referendums) is now tabled for voting.

➡️Acala voters can vote here: https://t.co/oDLJ8HJc4l

Related community offering: https://t.co/Lwh2ISrXys

— Acala (@AcalaNetwork) 17 August 2022

By community decision, the first traceable amount was returned to the Honzon protocol for incineration.

The decision regarding the second tranche of tracking 1.68 billion faulty coins has been submitted to the community for consideration by the team.

A community proposal on Track #2 was submitted earlier today to return 1.68 billion aUSD bug mints and other assets from aUSD bug mints in iBTC/aUSD LP. A sentiment poll is live to garner a reaction:

Offer: https://t.co/u6hGTNpXeZ

Vote: https://t.co/UQcsi6kyCA

— Acala (@AcalaNetwork) 18 August 2022

Up to 99% of stablecoins issued as a result of the error remained in the network, but a small fraction were exchanged for DOT tokens and posted to exchanges. The Acala team has set a reward for the refund.

A third trace, 176,725 DOT, was sent from Acala to Polkadot by 8 of 16 addresses identified. 41,999 DOTs from ~176k DOT were sent to an exchange from 1 address and 134,726.44 DOT remained in Polkadot.

👉Award information in the title below

Results: https://t.co/IBcur4Ys0d

— Acala (@AcalaNetwork) 18 August 2022

At the time of writing, stablecoin aUSD pegged to USD is trading around $0.9. After billions of additional coins were minted, the price of the asset fell below a cent.

Recall that the first auction for the Polkadot parachain slot was won by the Acala project.

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