Balance Coin, an algorithmic stablecoin, lost more than 99% of its value after an attack targeted its oracle pricing mechanism. The token fell from approximately $1 to $0.0014, erasing nearly all of its nominal market capitalization of about $3.5 million.

Oracle pricing is a critical control point for lending and stablecoin systems because it determines how collateral is valued and when vaults can be liquidated. In this case, according to blockchain security company SlowMist, the attacker submitted an unusually low Bitcoin price to the protocol. That manipulated price caused vaults that would not normally have been eligible for liquidation to be liquidated. SlowMist said approximately $912,000 worth of assets were withdrawn from the 42DAO protocol in a single transaction as a result of the attack.

SlowMist stated that the root cause was the protocol’s acceptance of a low BTCB price supplied through the Median Oracle without sufficient checks. The security company said the attackers used the “poke” function in the Spotter module and the “bark” function in the Dog module to push the manipulated price into the system.

According to SlowMist, the Spotter module did not include safety mechanisms such as price deviation controls, a maximum depreciation limit, or minimum price protection. As a result, the unusually low price was recorded directly in the accounting module known as VAT.

The Dog module was able to use the updated price without any waiting period or additional oracle verification, allowing the attacker to immediately liquidate multiple BTCB-collateralized vaults. The compromised collateral was then converted into other assets, producing an estimated profit of approximately $912,000.

The incident highlights a common risk in decentralized finance protocols that rely on automated liquidation systems: if an oracle update can be accepted and acted on immediately without deviation checks or confirmation delays, an incorrect price can move directly from data input to collateral seizure.