Key Highlights
- Balance Coin (BLC) plummeted over 99% following a security breach on BNB Chain
- Hackers minted millions of unauthorized BLC tokens, exchanging them for USDT and BTCB
- Approximately $915,000 was siphoned through two malicious transactions
- Cybersecurity analysts SlowMist and PeckShield traced the attack to Bitcoin price oracle exploitation
- The breach targeted 42DAO, the decentralized governance organization overseeing Balance Protocol
An algorithmic stablecoin designed to maintain parity with the US dollar, Balance Coin experienced a catastrophic decline exceeding 99% on July 22 following reports from blockchain security analysts of a targeted attack on 42DAO operating on BNB Chain.
The digital asset plunged from approximately $1 to an all-time low of $0.001209 within hours. According to CoinMarketCap data at press time, Balance Coin was changing hands near $0.00247, representing a 99.75% decline in a single day.
Cybersecurity company PeckShield calculated total damages at approximately $915,000. The firm attributed the dramatic price collapse to a vulnerability exploitation affecting 42DAO, the decentralized autonomous organization governing the Balance Protocol infrastructure.
TenArmor, a blockchain security company, identified two questionable transactions connected to GemJoin and 42DAO on BNB Chain. The initial transaction created approximately 4.5 million BLC tokens from a zero address before transferring them to PancakeSwap V2.
The perpetrator subsequently exchanged the freshly created BLC for Tether USDT and Binance-pegged Bitcoin. Approximately two hours afterward, a follow-up transaction employed identical tactics to generate another 5,900 BLC tokens and drain additional liquidity from the pools.
Technical Details of the Oracle Exploit
According to SlowMist’s analysis, the assault leveraged a compromised Binance Bitcoin oracle that displayed an artificially deflated price. This vulnerability deceived the system into marking solvent Bitcoin-collateralized positions as liquidation candidates.
“The attacker executed a single-transaction combination that took advantage of inadequate price safeguards and liquidation delays in a Maker-inspired architecture,” SlowMist explained. The perpetrator liquidated several BTCB positions and captured the resulting profits.
The creation of uncollateralized tokens saturated decentralized exchange liquidity pools with excessive BLC inventory. This overwhelming sell pressure drove the token far below its intended dollar valuation with no recovery mechanism available.
Pattern of Unauthorized Token Minting in Decentralized Finance
Similar exploitation strategies have compromised other platforms. During May, MAPO experienced a 96% drop after malicious actors exploited a cross-chain bridge weakness to create unauthorized tokens and liquidate them through decentralized platforms.
In a separate incident, Stake DAO confronted an attack where perpetrators generated trillions of vsdCRV tokens before converting them to ETH. Resolv’s USR stablecoin similarly lost its dollar peg during March following a comparable unauthorized token generation event.
Balance Coin functions as the primary stablecoin within the Balance Protocol infrastructure, which according to its GitBook documentation relies predominantly on Bitcoin Cash as collateral.
No official incident analysis from 42DAO had been made available publicly at the time of publication. Cointelegraph noted that it contacted 42DAO seeking additional information, though no statement had been issued.
Blockchain transaction records identify two suspected malicious transactions as the attack vector, with security analysts confirming damages near $915,000.
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