Acala Another Failed Stablecoin

In today's edition of YIYL (You Invest You Lose) we go back to bashing our heads on the idea of creating your own dollar. Look people have been trying to print their own dollars for over a century and it's not going to stop, this is just the modern version of it, and like any dollar counterfeiting it's going to fail.

This time the challenger is Acala, a Polkadot-based algo stablecoin, aUSD would be minting at apps.acala.network/vault using DOT, LDOT, ACA, and LCDOT as the first accepted collateral assets.

It was basically a makerDAO copycat but with even shittier more illiquid collateral than ETH but hey what could go wrong?

What can go wrong will go wrong

Well it appears that someone was able to gain access to the network, and these users were permitted to issue over 1.2 billion aUSD of course being the smart and savvy investors they dumped it real quick.

Once the peg broke it was all ski slopes from there without any hope of a recovery with the free fall hitting a 99% loss from $1 to $0.00989106.

source: - coingecko.com

Any damage to the wider shitcoins?

As for part of the collateral, it wasn't really affected because you don't want to dump a stablecoin for some rando shitcoin, you're going to look for the most liquid market to dump into to try and get as much as possible, so I am sure they dumped for Polka instead.

If we look at Acala it dropped from 32 cents down to 28 cents which doesn't matter much if you consider it's down -89.6% from its high of $2.79 on 25 January 2022.

I assume the ability to "pause" a network so easily means they could limit the damage and just shows these are only excel sheets and have no real decentralisation in any meaningful way.

source: - coingecko.com

Sounding very decentralised

Acala embarrassed at their failures lead with this pretty standard tweet of nothing to give their bag holders an update on where the money had gone.

Acala also revealed that operations have been halted, following the rise of “configuration issues” on the network.

Much decentralised if you can pause it, lol I thought code is law bros?

https://twitter.com/AcalaNetwork/status/1558642849649856512

Sources:

• coingape.com

ALL algo stablecoins will fail or have failed

Here's the thing people don't get about stablecoins, they either remain small and insignificant that there is no liquidity to realise any sort of volume. So lets say you had $100 in the stablecoin and you want to sell it, you would incur slippage so it makes it unattractive versus a centralized stablecoin so no ones going to hold any sizable value in that system and its doomed to linger.

In addition, that means very few people will want to accept it for goods and services because they can't realize the full value.

On the other end, the bigger it gets the harder it becomes to maintain the peg as bots need to constantly arbitrage and hold larger value to keep the peg, these bots, the orcale, the smart contract and it's minitng process, the bridge, the exchanges and the holders are all points of failure that can be attacked.

Something we've all seen before to catastrophic effects but hey who is going to listen to me?

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