Yala’s $YU Stablecoin Struggles to Regain $1 Peg After Attack

Yala’s $YU stablecoin struggles to recover its $1 peg after an attack minting $120 million YU on Polygon. The token, now trading below parity, halted key functions. Collaboration with SlowMist aims to secure and investigate Yala Protocol.

Yala’s $YU stablecoin, backed by Bitcoin, suffered an attack that crashed its value to $0.2046. As of September 2025, it trades below its $1 peg, with key functions paused during a slow recovery.

The situation has disrupted the market, illustrating stablecoin vulnerability. The broader implications could unsettle investor trust in collateral-backed digital assets, spotlighting potential risks.

Yala’s $YU stablecoin experienced a dramatic devaluation after a critical exploit let attackers mint 120 million tokens on Polygon. The incident compromised the coin’s stability, currently struggling to regain its stablecoin peg amidst significant protocol disruption.

Security experts at SlowMist are collaborating with Yala Protocol to investigate the breach. While the exact leadership figures have not publicly commented, Yala assured users of asset safety and paused some features as a precaution.

“We’ve identified issues and, as a precaution, paused some product features. Please wait for our green light before re-engaging.” — Yala Protocol, Official Social Media Account

The market has felt the effects as Yala’s market cap dropped, accentuating concerns about stablecoin security. Liquidity in the Ethereum-USDC pool has significantly dwindled, reflecting heightened volatility and challenges in rebuilding trust and market confidence.

Financial implications include a notable decrease in the total value locked (TVL) within Yala’s ecosystem. This event marks a substantial depegging occurrence reminiscent of past stablecoin crises. It underscores the persistent vulnerability in decentralized finance architectures.

The incident signals the need for robust security measures and regulatory oversight. Closer scrutiny of collateralized stablecoin infrastructures is anticipated, with potential technological adaptations likely in risk management protocols to mitigate future risks.