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

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

Based mostly on studies from the dYdX group 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 worth crash raised concerns within the crypto community a few doable exit rip-off.

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

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

In line with Juliano, the v3 insurance coverage fund nonetheless holds $13.5 million, and customers’ funds weren’t affected by the incident. “Though no consumer funds had been affected, we may also be conducting an intensive evaluation of our danger parameters and making applicable modifications to each v3 and doubtlessly the dYdX Chain software program if crucial,” he famous on X.

Stability modifications 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 boost eyebrows a few doable insider job within the YFI market. Some customers claimed that fifty% of the YFI token provide was held in 10 wallets managed by builders. Nonetheless, Etherscan knowledge suggests a few of these holders are crypto trade 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