Balance Coin (BLC), an algorithmic stablecoin designed to maintain a 1:1 peg with the U.S. dollar, lost more than 99% of its value on Tuesday after blockchain security firms linked the collapse to a suspected exploit involving 42DAO.
According to blockchain security firm PeckShield, the incident resulted in an estimated $915,000 in losses. The firm said the exploit caused BLC to fall from its intended $1 value to as low as $0.001209. At the time of writing, CoinMarketCap data showed the token trading around $0.00247 over the past 24 hours.
#PeckShieldAlert Balance Coin $BLC has plummeted -99% @42dao_official @42dao_official has been exploited for ~$915K pic.twitter.com/1bdRpMQBs3
— PeckShieldAlert (@PeckShieldAlert) July 22, 2026
How the suspected exploit happened
Blockchain security firms PeckShield and TenArmor traced the incident to two suspicious transactions on BNB Chain.
According to TenArmor’s onchain analysis, the attacker first minted about 4.5 million BLC tokens from a null address before transferring them to PancakeSwap V2. The newly created tokens were then exchanged for Binance-pegged USDT (BSC-USD) and Binance Bitcoin (BTCB), draining liquidity from the protocol.
Roughly two hours later, the attacker reportedly repeated the same method, minting another 5,900 BLC and swapping those tokens for additional assets.
The unauthorized token creation increased BLC’s circulating supply, flooding decentralized exchange liquidity pools with newly minted coins and sending the stablecoin sharply below its intended dollar peg.
What the collapse means for Balance Protocol
Balance Coin serves as the core stablecoin of the Balance Protocol ecosystem on BNB Chain, where it is designed to maintain a value close to $1 through an algorithmic mechanism.
The exploit has left the protocol facing a major credibility test. With BLC trading at only a fraction of its intended value, its role as a stable medium of exchange within the ecosystem has been severely disrupted.
As of publication, 42DAO had not released a detailed post-incident report explaining the exploit or outlining recovery plans. The available information is based primarily on blockchain security firms’ analysis of onchain activity.
Although the token recovered slightly from its intraday low, it remained down more than 99%, showing weak market confidence following the incident.
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Crypto community questions cause of BLC collapse
The sharp collapse of Balance Coin quickly drew attention across the crypto community, with traders and blockchain analysts sharing price charts showing the stablecoin’s near-total wipeout.
Posts on X described the crash as one of the biggest stablecoin failures in recent months, with many using warning alerts as the token fell from nearly $1 to fractions of a cent.
Several users questioned whether the incident was the result of a protocol exploit, a rug pull, or another type of security failure. As blockchain security firms published their findings, discussions shifted toward technical issues, including reports of a faulty BTCB oracle and liquidation vulnerabilities highlighted by SlowMist and PeckShield.
The list of unauthorized minting continues to grow
Earlier this year, Resolv’s USR stablecoin temporarily lost its peg after attackers minted unbacked tokens and sold them through DeFi markets, forcing the protocol to pause operations during its investigation.
A similar attack also hit MAPO in May, when attackers exploited a bridge vulnerability to mint unauthorized tokens, triggering a 96% price collapse. Stake DAO also suffered another exploit during the same month after an attacker reportedly minted trillions of vsdCRV tokens before swapping them for ETH.
The latest incident shows how unauthorized token minting continues to serve as a major risk to DeFi protocols, particularly those that rely on liquidity pools and algorithmic mechanisms to maintain token value.
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