Balance Coin (BLC), the algorithmic stablecoin of the Balance Protocol, crashed from almost $1 to below $0.002 within 24 hours after a reported exploit drained liquidity. On July 22, the token briefly hit a low of $0.001209, losing over 99% of its value and breaking its peg to the US dollar.

The sharp decline occurred after an attacker manipulated the oracle price for Binance Bitcoin (BTCB) on the 42DAO lending protocol, which lacks key safeguards such as price deviation checks and liquidation delay mechanisms. This allowed unauthorized liquidations of BTCB vaults that were not actually eligible for liquidation.

Details of the Exploit

Security firm SlowMist identified the root cause as exploitation of the Median Oracle's abnormally low BTCB price feed via Spotter and Dog functions. The attacker minted about 4.5 million BLC tokens from a null address and swapped them on PancakeSwap V2 for Binance USDT and BTCB, draining liquidity.

Two suspicious transactions on BNB Chain were linked by researchers from TenArmor: an initial minting of 4.5 million BLC tokens followed by another minting of approximately 5,900 tokens two hours later, both contributing to liquidity depletion.

Financial Impact and Broader Implications

According to PeckShield, the exploit caused losses totaling around $915,000 for users tied to 42DAO. The sudden increase in BLC supply flooded decentralized exchange pools, triggering a massive sell-off and causing the stablecoin to lose its dollar peg.

This incident adds to a series of DeFi failures in 2026 involving smart contract hacks, oracle manipulations, bridge exploits, and unauthorized token minting. Earlier this year, MAPO lost 96% of its value due to a minting exploit, while Stake DAO suffered after a massive minting event of vsdCRV tokens.

The collapse highlights ongoing risks in algorithmic stablecoins, which maintain their value through protocol rules rather than traditional asset backing.

Balance Coin Stablecoin Collapses After $1 Million Bitcoin Price Exploit provides further context on related events.

This content is for informational purposes only and does not constitute financial advice.