1d ago
🧵PANews Original | The 300 Trillion PYUSD Error & The Hidden Governance Crisis of Stablecoins
1/Incident Overview
In the early hours of October 16, #stablecoin issuer @Paxos accidentally minted an astonishing 300 trillion PayPal USD (PYUSD) due to a parameter input error — 110,000 times the actual circulating supply.
Although the tokens were quickly burned to prevent market disruption, the incident exposed deep vulnerabilities in the governance and technical oversight of centralized stablecoins.
2/ Systemic Risk Exposure
Even with full asset backing, centralized stablecoins remain susceptible to human error and operational failure. Had this mistake not been corrected immediately, it could have caused PYUSD depegging, DeFi liquidity pool imbalance, and potential protocol-level emergency responses such as contract freezes.
3/ Governance & Internal Controls
This incident raised questions about Paxos’ internal review and multi-signature approval mechanisms, highlighting the need for stronger anomaly detection systems, stricter permission management, and enhanced technical safeguards.
4/ Industry Implications
The Paxos case serves as a wake-up call for the stablecoin industry. Issuers must strike a balance between rapid intervention capabilities and decentralized governance, minimizing the risk of single-point failures that could lead to widespread financial instability.
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