Balance Coin collapses 99% after $915K 42DAO exploit

Balance Coin (BLC), the algorithmic stablecoin of Balance Protocol, collapsed by more than 99% after a suspected exploit tied to 42DAO, the governing DAO, drained about $915,000. Security researchers reported two suspicious transactions on the BNB Chain, minting millions of BLC from a null address and steering the new tokens into PancakeSwap for conversion into Binance-pegged USDT and BTCB. The minting allowed the attacker to flood pools with unbacked BLC, triggering a rapid depeg and selling pressure that erased the token’s dollar peg. Investigations by PeckShield and TenArmor traced the attack to vulnerabilities in 42DAO’s governance and minting mechanics, with analysts noting the attacker used similar methods in two waves, including a second minting of 5,900 BLC. The incident underscores the fragility of algorithmic stablecoins and highlights broader DeFi security risks, including how vulnerabilities in related DAOs can crash token values, as noted by reporting and post-mortem analyses from industry researchers.