YALA PROTOCOL

DESCRIPTION OF EVENTS

Yala, a platform that allows users to over-collateralize Bitcoin (BTC) in exchange for $YU—its stablecoin—aims to unlock cross-chain liquidity for DeFi protocols and real-world assets (RWAs). Yala emphasizes self-sovereignty, offering low liquidation risk and full exposure to Bitcoin. The platform operates a flywheel model where long-term BTC demand drives liquidity, adoption, and overall growth.

As part of its strategy, Yala provides tailored yield options through its Pro, Lite, and Institution Modes. With a total value locked (TVL) of $184.82 million and a $YU yield of up to 60.01%, users can explore a range of opportunities in DeFi and RWAs, supported by leading partners in the ecosystem. Yala’s mainnet unlocks Bitcoin’s untapped liquidity, facilitating both high yield generation and easy cross-chain movement.

Unfortunately, one of the Yala Protocol developers wasn't fully honest.

"A hacker abused temporary deployment keys during authorized bridge deployment, set up an unauthorized cross-chain bridge, and extracted 7.64M USDC (~1,636 ETH)."

Hacker Addresses:

Polygon: 0x55d67b5e0e1c88f48c8a9d978ea76b9ec9d488a9

Solana: 87pS8qCum6qaSszbvoARBmFg1Mh1cqcE4ZTAsXfejBMz

ETH: 0x29F48B783EF90F81B51242D9a55e022A214274F5

Losses are the amount Already used by hacker: 7,712,999.80006 $YU. Other minted YU were unable to be redeemed.

Immediately after detecting suspicious activity, Yala engaged top-tier blockchain security firms, SlowMist and Fuzzland, to conduct a root cause analysis and prevent any further impact. Their expertise was enlisted to understand the exploit thoroughly and begin mitigating the associated risks.

To prevent additional user exposure, Yala promptly disabled the ‘Convert’ and ‘Bridge’ functions, which were identified as potential vectors for the exploit. At the same time, the team worked quickly to contain the breach by halting unauthorized minting and transfers. Protective safeguards were deployed across the platform to secure liquidity and maintain systemic stability during the incident.

Yala also mobilized forensic partners to track on-chain activity and gain a clear picture of how the exploit occurred, who it affected, and whether it had any cross-chain consequences. Upon identifying the individual behind the hack, Yala coordinated efforts with both local and international law enforcement agencies to pursue legal action and support recovery efforts. This rapid, multi-pronged response reflects Yala’s commitment to user safety and the resilience of its ecosystem

To mitigate the impact of the incident, Yala has established several core principles to guide the recovery process. First and foremost, the platform is committed to protecting all users from any potential losses. As part of this commitment, all illegally generated $YU will be burned, eliminating any unauthorized tokens from circulation.

Yala has outlined a clear and structured recovery plan following the security breach. On September 23, 2025, all illegally minted $YU will be destroyed, and the liquidity will be fully restored. This will enable all users to swap their $YU for USDC at a 1:1 ratio, ensuring that affected users can recover their assets.

To further enhance security and prevent future incidents, Yala will implement extra monitoring for admin actions, bridge statuses, and contract updates. The team will act swiftly but with careful consideration to ensure fairness for all users, making sure that the recovery process is as transparent and equitable as possible. This recovery plan reflects Yala’s dedication to maintaining the trust of its users and securing the long-term stability of the platform.

Yala will conduct a thorough audit of contracts and bridge settings, involving both internal engineers and external security experts like Fuzzland and Cubist to ensure the platform's integrity is restored.

Yala, a platform that allows users to collateralize Bitcoin for its stablecoin $YU, experienced a security breach when a developer exploited temporary deployment keys to set up an unauthorized cross-chain bridge. This hack led to the extraction of approximately 7.64 million USDC (~1,636 ETH). In response, Yala engaged top security firms, disabled key functions, and implemented safeguards to contain the breach. The platform has since launched a recovery plan that includes burning all illegally minted $YU, restoring liquidity, and allowing users to swap $YU for USDC at a 1:1 ratio. Additionally, Yala will conduct an audit and implement stronger monitoring to prevent future incidents, ensuring user protection and system stability moving forward.

Yala Post Mortem  (Sep 26)
Yala Protocl - "Our protocol recently experienced an attempted attack that briefly impacted YU’s peg. Thanks to the quick collaboration with @SlowMist_Team and our security partners, we’ve identified the issue and are already rolling out improvements to strengthen the system." - Twitter/X (Sep 26)
Yala Protocol - "We’ve published our Post-Mortem Report on the Sept 14 incident. It details the timeline, analysis, and our recovery plan." - Twitter/X (Sep 26)
Yala Protocol - "Following the $YU liquidity incident on September 14, 2025, the following measures have now been completed to ensure the continued strength and reliability of the Yala protocol." - Twitter/X (Sep 26)
Yala Protocol - "$YU has fully recovered and the Yala protocol is operating as normal." - Twitter/X (Sep 26)
Yala Homepage (Sep 26)
Yala Protocol - Twitter/X (Sep 26)

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