After the Acala exploit, the network and tokens are frozen. This raises questions
Beanstalk's algo stablecoin protocol is back online after it was hacked for $77 million
Circle invested in two crypto companies that were hacked, which added to its problems while stablecoin was under scrutiny
Beanstalk Farms, an algorithmic stablecoin project based on Ethereum, has relaunched its protocol less than four months after it went offline because of a $77 million governance exploit.
After the governance exploit and flash loan attack in April, the protocol and how it is run have been put on hold. On Saturday, however, they were brought back online in an event called "Replant."
In a statement sent to Cointelegraph, Beanstalk said that it has come out of the situation stronger than ever. This is likely a reference to the governance and security of the protocol.
"Beanstalk is stronger than ever after going through all of this. It shows how trustworthy the protocol is and how it could help make a permissionless future possible, said Publius, the group behind the BEAN stablecoin and protocol.
Publius said that it has moved protocol governance to a multisig wallet run by the community until "a secure on-chain governance mechanism can be put in place."
The team also said that Trail of Bits and Halborn, two "top not smart contract auditing firms," have done two protocol audits for them.
The spokesperson also said that new applications are already being built on the network. On July 26, the Root Protocol announced a $9 million seed round to build marketplaces for finance, commerce, and sports betting on Beanstalk.
Today, Beanstalk Farms is thrilled to announce that Beanstalk has been Unpaused on the one year anniversary of its initial deployment.https://t.co/HxZmwWksZe
— Beanstalk Farms (@BeanstalkFarms) August 6, 2022
The project has a long way to go before its metrics are back to where they were before the hack. Around the middle of April, Beanstalk's algo-stablecoin BEAN passed $100 million in market value. At the time of writing, however, the number is only $284,426 and the asset is worth $0.0039, which is a long way from $1. Data from CoinGecko shows this.
The project has also had trouble getting back some of the money that was stolen in April. As of June 5, a fundraiser for the project had raised $10 million to replace the stolen money.
Long-term sustainability
But the jury is still out on stablecoins that are backed by algorithms, so it's hard to say how long-term BEAN will be. Even back in June, Publius brought this up when he wrote:
“At present, it is unclear whether Beanstalk is good enough to sustain itself in perpetuity. There still remain some inefficiencies in the model. However, Beanstalk is likely good enough to continue to sustain itself in the short term.”
“The thing about a system like Beanstalk is that it works until it doesn’t. You can never actually know if it works, only that it has worked so far. So much uncertainty is scary, particularly without a clear definition of success,” Publius added.
Many projects have come up with different ways to get around the need for collateral and the problems with centralization that come with starting a scalable stablecoin.
Beanstalk's variation uses a decentralized credit facility, a decentralized price oracle, and a governance community to work and stay around its intended $1.00 peg.
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