Key takeaways:
- Decentralized exchange dYdX was compelled to pay $9 million in user liquidations out of its insurance fund.
- The v3 insurance funds were utilized to close holes in the YFI market’s liquidation procedures.
On November 17, decentralized exchange (DEX) dYdX was compelled to pay $9 million in user liquidations out of its insurance fund.
Antonio Juliano, the founder of dYdX, claims that the losses were the consequence of a “targeted attack” against the exchange.
According to claims from the dYdX team on X (formerly Twitter), the v3 insurance funds were utilized to close holes in the YFI market’s liquidation procedures.
On November 17, the Yearn.Finance (YFI) token had a 43% decline following a prior week of almost 170% growth. The abrupt drop in price sparked worries about a potential exit scam among cryptocurrency enthusiasts.
The purported assault went after long positions in YFI tokens on the exchange, wiping out holdings valued at about $38 million. Juliano thinks that the dramatic drop in YFI and trading losses impacting dYdX are the result of market manipulation:
“This was pretty clearly a targeted attack against dYdX, including market manipulation of the entire $YFI market. We are investigating alongside several partners and will be transparent with what we discover.”
Juliano claims that there is still $13.5 million in the v3 insurance fund and that the incident had no effect on user funds. He mentioned X:
“Even though no user funds were affected, we will also be conducting a thorough review of our risk parameters and making appropriate changes to both v3 and potentially the dYdX Chain software if necessary,”
The community became suspicious of a potential insider job in the YFI market after the profitable trade destroyed almost $300 million in market capitalization from the YFI coin.
According to certain users, ten wallets under the control of developers held half of the total amount of YFI tokens. However, according to Etherscan data, some of these holders appear to be cryptocurrency exchange wallets.
