New Exploit Sends Polychain’s Yala (YU) Stablecoin Crashing to $0.20

Yala stablecoin (YU) which is backed by Polychain has suffered a malicious attack that sent the price tumbling to $0.2075. The incident triggered a prompt response from the Yala team that acted to strengthen the security breach.

In a post on X, the Yala team assured users of the safety of their assets despite the massive drop in price outlook due to the attack.

Yala Stablecoin Recovers from Sharp Depeg to $0.20

Notably, Yala stablecoin has rebounded to the $0.91 price level after the team’s reassuring message to the community. However, when the attackers attempted a hack on the protocol, it caused a “temporary disturbance” in YU’s peg. Although the peg did not collapse completely, it crashed massively.

With assistance from Yala’s security expert and collaboration with SlowMist, the team were able to detect the problem. The quick response of the security team prevented loss of users’ assets. According to the update, “All user assets remain safe. We’re focused on reinforcing stability and making the protocol even more robust.”

Meanwhile, attempts are ongoing to investigate the breach with a view to preventing future reoccurrence. The move is to regain investor confidence in the project. Additionally, to ensure stability as the team works on system improvements, the Convert and Bridge functions have been disabled temporarily.

Volatility Persists Despite Recovery Efforts

Although YU rebounded to $0.91 levels, the asset continued to fluctuate for a while between $0.7980 and $0.9960 in the market space. The volatility continues for YU but at the time of this writing, it changed hands at $0.9294, representing a 7.04% decline in the last 24 hours.

Curiously, despite the volatility, trading volume is up by a staggering 13,139.01% at $5 million. It appears users are timing the dips to accumulate the stablecoin.

Investor Confidence Tested as YU Struggles to Maintain Peg

The current situation might further impact investor confidence as the stablecoin’s primary function is to maintain a 1:1 peg with fiat currency. The continued fluctuations defeats this aim and users might have a hard time relying on the asset.

With a total market capitalization that is less than $142 million, YU does not command a huge presence in the stablecoin market. Industry giants like Tether (USDT) and Circle (USDC) with market caps of $170 billion and $73 billion respectively would easily pull users. USDT recently revealed plans to go live on the Bitcoin blockchain.