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Balance Coin lost more than 99% of its value on July 22 after security researchers reported an exploit against 42DAO, the governance organization behind Balance Protocol.
BLC fell from about $0.9954 to roughly $0.00136, breaking its dollar peg and erasing nearly all of its approximately $3.5 million nominal market value. The protocol’s loss was estimated at about $915,000.
Manipulated BTCB Oracle Triggered Invalid Liquidations
SlowMist said the attacker caused Balance Protocol to accept an abnormally low oracle price for BTCB, Binance’s tokenized Bitcoin asset on BNB Chain. The distorted price made several BTCB-backed vaults appear undercollateralized even though they should not have qualified for liquidation.
Researchers said the attacker then liquidated the positions and exchanged the extracted collateral for profit. The protocol allegedly lacked safeguards that could have rejected the extreme price update or delayed liquidation while the value was checked.
Researchers Estimate Losses Between $912K and $915K
The attacker’s profit was estimated at about $912,000, close to the protocol’s estimated loss of roughly $915,000.
The difference appears to reflect early calculations rather than separately confirmed loss events. 42DAO had not published a technical post-mortem or final loss figure when the incident was reported.
Newly Issued BLC Was Sold Through PancakeSwap Pools
On-chain researchers also reported that the incident involved additional BLC entering decentralized exchange liquidity. The newly issued BLC was exchanged for BSC-USD and BTCB through PancakeSwap.
The rapid sale added pressure to BLC’s weakened peg after the reported oracle and liquidation failures. Researchers said the incident involved both a manipulated BTCB oracle value and BLC supply moving through PancakeSwap pools.
BLC Lost Its Dollar Peg as Market Value Fell From $3.5M
Balance Protocol describes BLC as a dollar-pegged stablecoin backed by crypto collateral. Its documentation says the system is built around collateralized vaults and identifies Bitcoin Cash as the primary backing asset.
The exploited positions involved BTCB, according to the security-firm findings. 42DAO acts as the protocol’s governing body, but it had not confirmed which contracts were affected or whether additional collateral remained at risk.
42DAO Has Not Released a Recovery Plan or Post-Mortem
The absence of an official response leaves unresolved whether Balance Protocol has paused minting, liquidations, or other smart contract functions. It is also unclear whether the attacker has moved the proceeds or whether any funds can be recovered.
A post-mortem is needed to confirm how the oracle value was manipulated, which contracts were impacted, and whether users will be compensated. BLC remained far below its dollar target after the attack.
The next confirmed development depends on 42DAO disclosing its technical response, security fixes, and any plan to restore collateral or compensate users.
