Decentralized cryptocurrency exchange dYdX has revealed new measures to mitigate trading-related risks after burning $9 million from its insurance fund on November 17 to cover user losses.
According to an announcement on . Computer (ICP), Monero (XRM), Tezos (XTZ), Zcash (ZEC), SushiSwap (SUSHI), THORChain (RUNE), Synthetix (SNX), Enjin (ENJ), 1inch Network (1INCH), Celo (CELO) , Yearn.finance (YFI) and Uma (UMA).
dYdX activated its insurance fund to cover users’ trading losses on November 17 after a profitable trade targeting long positions in the YFI token led to the liquidation of positions worth nearly $38 million.
dYdX founder Antonio Juliano called the move a “targeted attack” on the exchange. According to him, YFI’s open interest in dYdX increased from $0.8 million to $67 million in a matter of days as a result of one individual’s actions. The same individual, according to Juliano, attempted to attack the SUSHI market on dYdX a few weeks earlier.
“We took steps to increase the initial margin ratios for $YFI before the price drop, but this ultimately was not enough. The actor was able to withdraw a good amount of $USDC from dYdX just before the price drop,” he wrote.
On X, the exchange team said that “highly profitable trading strategies have now been banned on dYdX,” in a reference to the language used by Mango Markets exploiter Avraham Eisenberg in his $116 million 2022 attack.
dYdX now offers a reward payment in exchange for valuable information:
dYdX will pay rewards to those who help the most in the investigation
We will not pay rewards or negotiate with the attacker.
We and others have made significant progress in identifying the attacker. We are in the process of reporting the information we have to the FBI.
— Antonio | dYdX (@AntonioMJuliano) November 19, 2023
The YFI token fell 43% in just a few hours on November 17 after skyrocketing more than 170% in November. The sharp drop erased more than $300 million in market capitalization from recent gains, according to data from CoinMarketCap. However, in the last 30 days, the token has still gained over 90%, trading at $9,190 at the time of writing.
The Yearn.finance team has not revealed any official details about the incident. A source familiar with the matter told Cointelegraph that the team’s developers do not control the majority of the token supply, firmly refuting initial concerns about a possible scam. The claim is supported by Etherscan data showing large centralized exchanges as major holders of YFI.
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