What to know:
- Balance Coin plunged 99.75% after a reported exploit, dropping from nearly $1 to $0.002459, briefly touching $0.001209.
- Attackers allegedly minted 4.5 million BLC, exploiting oracle manipulation before draining liquidity through PancakeSwap transactions.
- PeckShield estimated approximately $915,000 losses, linking the exploit to 42DAO’s unauthorized token minting incident.
Balance Coin (BLC), the algorithmic stablecoin powering the Balance Protocol ecosystem, lost more than 99% of its value after a reported exploit disrupted its dollar peg. The token fell from nearly $1 to as low as $0.001209 on July 22, raising fresh concerns about the security of decentralized finance (DeFi) stablecoin systems and oracle-based lending mechanisms.
According to CoinRanking, BLC is trading near $0.002459 after the incident, representing a 99.75% decline over 24 hours. The stablecoin’s trading range stretched between $0.001209 and $0.9955, highlighting the speed of the collapse. The event also triggered renewed scrutiny of algorithmic stablecoins, which rely on protocol mechanisms rather than traditional reserve-backed assets to maintain price stability.
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Oracle Manipulation Enabled Unauthorized Liquidations
According to a recent post by SlowMist, the exploitation was caused by manipulating the unusually low oracle price of the Binance Bitcoin (BTCB). The attacker reportedly exploited a missing price protection and liquidation delay mechanism in the MakerDAO-styled lending protocol. In that way, he managed to liquidate several BTCB vaults that did not meet liquidation conditions.
The security researchers have found suspicious transactions related to the exploit. According to the information provided by TenArmor, there were two transactions on BNB Chain associated with GemJoin and 42DAO. As it follows from their research, the first one mints approximately 4.5 million BLC tokens from a null address and moves them to PancakeSwap V2, where these tokens are exchanged for Binance USDT and BTCB. The second transaction took place in about two hours and involved the minting of 5,900 BLC tokens and draining additional liquidity.
Balance Coin Exploit Triggers $915K Losses
As PeckShield mentioned, the exploit cost the users approximately $915,000. It occurred due to the exploitation of 42DAO, a decentralized organization related to Balance Coin. As a result, the unauthorized minting sharply increased the supply of BLC tokens, filling the liquidity pools of the decentralized exchanges and putting increased selling pressure on this stablecoin. BLC lost its fixed value and dropped significantly under the intended one-dollar mark. It adds to a growing list of DeFi exploits in 2026 due to smart contract exploits, oracle exploits, bridge exploits, and minting of unauthorized tokens.
Earlier this year, MAPO lost 96% of its value due to a minting exploit, while Stake DAO faced losses after trillions of vsdCRV tokens were minted without going through the regular supply process. Although each of the exploits was associated with different flaws within protocols, they all show the way protocol weaknesses can rapidly reduce the value of the token.
In the case of Balance Coin, the primary task would most likely include investigating the exploit and evaluating the security architecture of the protocol and the possibility of compensating the users who have experienced losses. At the time of writing, the official post-incident report of 42DAO was not available yet.
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