Over the weekend, the Polkadot Technical Fellowship discovered an XCM issue and executed a whitelisted caller referendum to resolve it.
The underlying bug has been fixed, and the impacted assets were moved to a controlled account to prevent further extraction.
It did not affect user wallets or funds. No action is required.
The XCM error on Polkadot Asset Hub caused a supply accounting discrepancy, creating a pricing imbalance in the liquidity pool and resulting in losses to the Polkadot Treasury’s liquidity provisioning position.
The bug affected XCM messaging and caused approximately 4.06 million dotUSD to be incorrectly removed from the recorded token supply. Although the recorded supply decreased, the corresponding dotUSD tokens remained in the DOT/dotUSD liquidity pool.
Arbitrage traders targeted this pricing imbalance, which resulted in an estimated $1.3 million reduction to the Polkadot Treasury’s liquidity position.
An OpenGov referendum proposing the necessary corrective actions will follow shortly, alongside a full technical post-mortem.