Yala Protocol, a DeFi platform, has been the victim of a hack resulting in a loss of over $7.7 million. The attack involved the illicit minting of YU tokens.
Hacker's Exploit Scheme
The hacker exploited Yala's smart contract on the Polygon blockchain, minting 120 million YU tokens pegged to USD through Bitcoin reserves. They swapped 7.7 million YU for USDC on Ethereum and Solana.
Yala's Response to the Incident
Yala confirmed the breach through multiple posts on its X account, informing users of the issue. Convert and Bridge functionalities were suspended for safety. "All other protocol functions remain unaffected, and user assets remain safe," stated the Yala team.
Impact on YU and Next Steps
Following the exploit, the YU stablecoin lost its dollar peg, dropping as low as $0.2. Currently, YU trades around $0.86 with a market cap over $130 million. The Yala team is working on re-pegging the stablecoin and plans to compensate affected liquidity pools.
The attack on Yala underscores the vulnerabilities inherent in DeFi protocols and the importance of secure architecture for stablecoins. The Yala team is focusing on restoring confidence and security in their protocol.
