dYdX founder claims targeted attack led to $9M insurance claim

Decentralized alternate (DEX) dYdX was compelled to make use of its insurance coverage fund to cowl $9 million in person liquidations on Nov. 17. According to dYdX founder Antonio Juliano, the losses resulted from a “focused assault” in opposition to the alternate. 

Based mostly on stories from the dYdX crew on X (previously Twitter), the v3 insurance coverage fund was used “to fill gaps on liquidations processes within the YFI market.” The Yearn.Finance (YFI) token dropped 43% on Nov. 17 after hovering over 170% within the earlier weeks. The sudden value crash raised concerns within the crypto community a couple of attainable exit rip-off.

The alleged assault focused lengthy positions in YFI tokens on the alternate, liquidating positions value almost $38 million. Juliano believes buying and selling losses affecting dYdX, in addition to the sharp decline in YFI, have been attributable to market manipulation:

“This was fairly clearly a focused assault in opposition to dYdX, together with market manipulation of all the $YFI market. We’re investigating alongside a number of companions and will likely be clear with what we uncover.”

In response to Juliano, the v3 insurance coverage fund nonetheless holds $13.5 million, and customers’ funds weren’t affected by the incident. “Though no person funds have been affected, we can even be conducting a radical assessment of our danger parameters and making acceptable adjustments to each v3 and doubtlessly the dYdX Chain software program if vital,” he famous on X.

Stability adjustments on dYdX’s insurance coverage pockets. Supply: DYDX Explorer

The worthwhile commerce worn out over $300 million in market capitalization from the YFI token, main the neighborhood to lift eyebrows a couple of attainable insider job within the YFI market. Some customers claimed that fifty% of the YFI token provide was held in 10 wallets managed by builders. Nevertheless, Etherscan information suggests a few of these holders are crypto alternate wallets.

Cointelegraph reached out to dYdX and Yearn.Finance’s groups for remark and is awaiting a resoonse.

Journal: Beyond crypto — Zero-knowledge proofs show potential from voting to finance