Once Hacked For $77 Million, Beanstalk’s Algo Stablecoin Protocol Is Relaunched

Ethereum-based algorithmic stablecoin project Beanstalk Farms has relaunched its protocol just under four months after it went offline following a devastating $77 million governance exploit.

The protocol and its management have been paused since April after the management and flash loan attack, but were relaunched on August 6 at an event called ‘Replant’.

In an announcement shared with Cointelegraph, Beanstalk said it came out of the ordeal stronger than ever, likely in regards to protocol governance and security.

“Beanstalk has emerged stronger than ever on the other side of this ordeal. It is a testament to the protocol’s creditworthiness and its potential to help realize an unauthorized future,” said Publius, the developer group behind the BEAN stablecoin and the protocol.

Publius stated that protocol management has now moved to a community-managed multisig wallet until “a secure on-chain governance mechanism can be implemented”.

The team also stated that it has completed two protocol audits of “top-not smart contract auditing firms” in Trail of Bits and Halborn.

The spokesperson also emphasized that the development of new applications on the network is already underway, with the Root Protocol to announce a $9 million starting round on July 26 to develop financial, commercial and sports betting marketplaces on Beanstalk.

The project still has a long way to go until it matches the previous stats it achieved before the hack. In mid-April, Beanstalk’s algo stablecoin BEAN reached a market cap of $100 million, but at the time of writing, the figure stands at just $284,426, with the asset well off the $1 peg at $0.0039, according to data from CoinGecko.

The project has also had limited success in recovering the funds stolen in the April exploit. As of June 5, the project has raised $10 million through a fundraiser to recover the stolen money.

Long-term sustainability

However, as the jury is still out on algorithmically backed stablecoins, it remains to be seen how sustainable BEAN will be in the long run. Publius even emphasized this in June, as he noted:

“At this point, it’s unclear whether Beanstalk is good enough to sustain itself forever. There are still some inefficiencies in the model. But Beanstalk is probably good enough to sustain itself in the short term.”

“The thing with a system like Beanstalk is that it works until it stops working. You can never really know if it will work, only that it has worked so far. So much uncertainty is frightening, especially without a clear definition of success,” Publius added.

Related: Vitalik: Centralized USDC could shape the future of controversial ETH hard forks

Many projects have come up with different ways to get around collateral requirements and centralization issues associated with launching a scalable stablecoin.

The variation of Beanstalk relies on a decentralized credit facility, a decentralized price oracle, and a governing community to operate and stay around the target $1 peg.