YU stablecoin plummets to $0.2 after attempted attack on protocol.
- The YU stablecoin has plummeted to $0.2 after an attempted attack on the protocol.
- To prevent further instability, Yala has disabled its conversion and bridging features.
- After the recovery, YU is trading at $0.9212, below its target of $1.
The Bitcoin-backed Yala (YU) stablecoin has failed to regain its peg to the dollar after an attack on the protocol, with the token price falling to $0.2046.
The Yala team confirmed the incident in a post on X, noting that it “briefly impacted the YU peg.” The team added that it is working with blockchain security firm SlowMist and other security partners to investigate the incident:
“Update: All funds are safe. Bitcoin deposited to Yala remains in the vaults, nothing has been lost. We have identified issues and have suspended some product features as a precaution. Please wait for our signal before resuming operations.”
Source: x.com
To prevent further instability, Yala has disabled the conversion and bridging functions. The rest of the protocol functions are working as usual, and user assets are safe.
How the attacker operated
According to Lookonchain, the hacker exploited a protocol vulnerability by issuing 120 million YU tokens on Polygon. He then pooled and sold 7.71 million YU for 7.7 million USDC via Ethereum and Solana. The attacker converted the proceeds into 1,501 ETH and distributed them across multiple wallets, while retaining 112.29 million unpooled YU tokens.
Source: x.com
With a market cap of $141 million, the liquidity of the YU pool on Ethereum is only $340,000 in USDC. After a brief recovery to $0.917, the stablecoin is trading around $0.9212, below its planned $1 peg.
Earlier, analytics company Hacken published a Web3 Security Report for 2025: in just six months, the crypto industry lost more than $3.1 billion due to hacks and fraud.