Yala’s Bitcoin-collateralized YU stablecoin lost its dollar peg after an attempted protocol attack, briefly falling to $0.2046; the team says user funds are safe while features like Convert and Bridge remain paused as security partners investigate.
YU stablecoin fell to $0.2046 after an exploit attempt
Yala paused Convert and Bridge; Bitcoin reserves remain self-custodial or in vaults
Attacker reportedly minted 120M YU, swapped 7.71M for ~7.7M USDC, converted to 1,501 ETH
YU stablecoin drops to $0.2046 after attempted attack; Yala confirms funds safe and pauses features while investigating — follow updates from COINOTAG.
Yala’s Bitcoin-collateralized YU stablecoin dropped as low as $0.2046 after an attempted protocol attack, failing to restore its $1 peg.
Yala’s Bitcoin-backed stablecoin YU has failed to regain its dollar peg following an “attempted attack” that sent the token down to $0.2046. COINOTAG reports the project has paused select features while security partners investigate.
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What happened to Yala’s YU stablecoin?
YU stablecoin suffered an exploit attempt that destabilized its peg; the team reports no funds lost and has paused Convert and Bridge features while working with blockchain security firm SlowMist and other partners to investigate. Short-term peg restoration attempts remain ongoing.
How did the attacker reportedly exploit Yala?
Blockchain analytics firm Lookonchain reported the attacker minted 120 million YU on Polygon, then bridged and sold roughly 7.71 million YU for about 7.7 million USDC across Ethereum and Solana. The USDC was converted into approximately 1,501 ETH and distributed across multiple wallets. Per on-chain data, 22.29 million YU remain on Ethereum and Solana, with ~90 million YU still on Polygon unbridged.
Yala team announcing that all funds are safe. Source: Yala
Why did YU lose its peg and how big was the liquidity gap?
YU is backed by overcollateralized Bitcoin reserves intended to keep the token at $1. However, DEX Screener data shows the Ethereum pool has only about $340,000 in USDC liquidity compared with a reported $119 million market cap for YU. The mismatch between circulating supply after the mint and available stable liquidity likely amplified price slippage when large amounts were sold.
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Yala posted that “all funds are safe,” noting Bitcoin deposited to the protocol remains self-custodial or held in vaults with none lost. As a precaution, the team has disabled the Convert and Bridge features. Other protocol functions remain active but the team advised users to wait for a clear update before re-engaging.
The Yala team states no funds were lost and that Bitcoin reserves remain self-custodial or in vaults. On-chain reports indicate the attacker minted YU and sold it, creating a market shock rather than an immediate drain of collateral reserves.
According to blockchain analytics reporting, the attacker minted 120 million YU on Polygon, sold roughly 7.71 million YU for around 7.7 million USDC, and converted that to ~1,501 ETH. Significant YU balances remain across chains.
Users should avoid using paused features (Convert and Bridge) until Yala issues a clear “green light.” Monitor official Yala updates and rely on on-chain explorers for transaction verification.
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