Acala Network aUSD Depeg: On Risks You Can't Control
2 min read · · Korean original
A problem occurred on Acala Network, a DeFi platform running on the Polkadot network. As a result, aUSD, the stablecoin issued by the project, depegged. Depegging means a peg comes undone. aUSD is a stablecoin designed to hold a value of $1, but its value fell far below $1.
The problem came from the iBTC/aUSD pool, which had launched that same morning. The media called it an attack, but since the root cause was a flaw in the system, I think it's more accurate to call it an internal defect. In any case, someone used it to mint $1.27 billion worth of aUSD, which sent aUSD down to $0.5.
Acala Network is Polkadot's flagship DeFi platform, and according to the team, aUSD is a decentralized, multi-collateral, cross-chain stablecoin. Of course, this incident has raised questions about whether it's really decentralized DeFi. Personally, I think protecting investors' interests this way is the right call, but in principle, this kind of intervention can also be a problem. After all, it means the team could just as easily freeze individuals' funds at will.
Fortunately, the peg has now almost fully recovered. Seeing it climb back up to $0.9, the people who bought at the bottom were the winners. As for me, it reminded me of LUNA and UST, so I didn't touch it at all.
Personally, I don't use DeFi much. I don't want to take on risks I can't control. Of course, every investment and activity comes with risk, but with trading, for example, I can set my own stop-loss and take-profit, so it's practically 100% within my control. That is, if you set aside things like exchange problems or mistakes caused by my own condition or bad judgment.
After getting badly burned by LUNA and UST, which I had firmly believed in, I've come to believe the saying that anything that looks good always comes with risk. That's why I won't even look at USDD, issued by Tron. Of course, aUSD isn't a case of promising high returns and then collapsing, but in general, there are uncontrollable risks that come with participating in DeFi.
How wonderful and beautiful does it sound that you can make money just by depositing and sitting back? But it seems it will still take some time before a perfect DeFi platform running on code comes along.
