Yala’s YU Stablecoin Faces 100% Utilization Risk as USDC Borrowing Drains Frontier Liquidity on Euler

Yala, the stablecoin protocol, said on November 16 that it has acknowledged community concerns and is actively investigating, with further updates expected. The notice follows ongoing DeFi scrutiny of the YU token and the Frontier market on Euler, as lenders assess risk.

On-chain activity has raised red flags: a suspicious address reportedly borrowed a large supply of USDC at elevated rates but has not repaid the debt, while another address linked to Yala has drawn nearly all available USDC and a major share of YU funds from the Frontier market on Euler. This has driven liquidity pressure to 100%, blocking withdrawals until lending parameters are adjusted.

Notwithstanding, YU on Solana allegedly maintains its peg, with a nearly 1 million USDC in the liquidity pool available for price peg withdrawals. This article presents a risk warning pending official updates; readers should monitor forthcoming disclosures before forming conclusions about distress.