Balance Coin Collapses 99% After $915,000 42DAO Oracle Exploit

Balance Coin plunged more than 99% after an attacker exploited 42DAO’s oracle and liquidation system on BNB Chain, extracting an estimated $915,000 from the protocol.

PeckShield placed the loss near $915,000 as BLC fell from about $0.995 to an intraday low of $0.001209 on Wednesday. The token later traded near $0.0025, leaving it more than 99% below its intended dollar peg.

The attacker used an abnormally low BTCB price supplied by 42DAO’s Median Oracle. The protocol’s Spotter contract accepted the price through its poke function without limits on price deviation, maximum drawdown or a minimum permitted value.

That price was written into the protocol’s accounting system before the Dog contract’s bark function initiated immediate liquidations across several BTCB-backed vaults. The liquidation system lacked a delay and did not independently verify the oracle update before processing the positions.

Attacker Mints BLC And Exits Through PancakeSwap

Two suspicious BNB Chain transactions were identified around 42DAO and GemJoin. The larger transaction created approximately 4.5 million BLC before routing the tokens into PancakeSwap V2 liquidity.

The attacker exchanged the newly minted BLC for BSC-USD and BTCB after the manipulated liquidations left the protocol with undercollateralized positions. A second transaction about two hours later created another 5,900 BLC and extracted additional assets through the remaining liquidity.

Balance Coin is the central stablecoin of the Balance Protocol ecosystem. Its design uses collateralized vaults, oracle prices and liquidation mechanisms to support the dollar target, while a protocol-owned buffer pool collects liquidation penalties and holds USDT.

The attack follows the $18 million Ostium oracle exploit, where manipulated price reports generated artificial trading profits against a USDC vault.

BLC Liquidity Disappears After Depeg

BLC entered the attack near its $1 target before unauthorized supply reached decentralized exchange pools. The rapid selling removed most of the token’s available paired liquidity and pushed its price to a fraction of one cent.

A similar supply shock sent TesseraDAO’s TSR token down 99% in June after an attacker minted 99 million tokens and sold them through BNB Chain liquidity for about $2.4 million.

42DAO had not published an official response, technical postmortem, recovery plan or instructions for BLC holders at publication. Its website continued to present BLC as a stable asset underpinning the wider 42DAO ecosystem.

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