Key Takeaways
- Yala (YU) has crashed by around 50% in 24 hours.
- The depeg was prompted by runaway borrowing that drained liquidity pools.
- The incident marks the second time YU has depegged from the dollar since its launch.
Bitcoin-backed stablecoin Yala (YU) has depegged from the dollar, plunging to around $0.47 as of early Monday, Nov. 16 (UTC).
The latest incident marks Yala’s second major depeg since its launch in May, with the events threatening to undermine the project’s momentum.
Yala Depegs Amid Liquidity Crunch
Starting at around 10:30 a.m. Sunday, Yala’s price started to slide dramatically, losing around half its value within less than 24 hours.
At the time of writing, the project team had not confirmed what was behind the depeg, stating only that they “are actively looking into” the issue.
The incident appears to have been triggered by a runaway borrowing, which drained USDC–YU liquidity pools on Euler.
X user Yields and More initially flagged the suspicious activity on the weekend, identifying a suspected insider wallet that was behind the aggressive borrowing.
At this time, Euler suspended YU lending markets and reached out to the project team, who were allegedly unresponsive, according to the post.
The team has also gone quiet on Yala’s official Discord channel, compounding fears of a rug pull as any remaining liquidity dwindled to nothing on Sunday.
Second Depeg in YU’s Tumultuous First Six Months
Yala’s latest depeg follows an incident in September, when attackers exploited a bridge vulnerability to mint approximately 120 million unauthorized YU on Polygon.
A post-mortem analysis by Halborn blamed the hack on an “off-chain security lapse” that compromised private keys.
The hacker was only able to swap $7.7 million for USDC before Yala’s team turned off the compromised bridge function.
Nonetheless, for a stablecoin with a market capitalization of just $130 million at the time, the breach was enough to temporarily break its peg to the dollar.
For the young project in an already shaky DeFi stablecoin market, YU’s back-to-back depegs could be devastating.
As user confidence wanes amid radio silence from the team and frozen markets on Euler, Yala risks permanent reputational damage.
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James Morales is CCN’s blockchain and crypto policy reporter. He has been working in the news media since 2020, writing about topics such as payments, banking and financial technology. These days, he likes to explore the latest blockchain innovations and the evolving landscape of global crypto regulation.
With an educational background in social anthropology and media studies, James uses his platform as a journalist to explore how new technologies work, why they matter and how they might shape our future.
