dYdX Founder Discloses Details on $9M Insurance Fund Loss; Refuses Negotiation with Hackers
Summary:
In a suspected exit scam on Nov. 17, $9 million was lost from the insurance funds of Decentralized Finance (DeFi) protocol, dYdX. During the hack, the YFI token's price dropped by 43%. Founder, Antonio Juliano, clarified that the compromise occurred on the v3 chain and not on the base dYdX blockchain. The dYdX team refuses to negotiate with the exploiters, opting instead to reward contributors to the ongoing investigation. The incident has elicited concerns within the cryptocurrency community due to the severe financial impact, including the $38 million liquidation of YFI tokens listed on the exchange.
The founder of the Decentralized Finance (DeFi) protocol dYdX, Antonio Juliano, disclosed details about the suspected exit scam on Nov. 17, which led to a $9 million loss in insurance funds. He delivered these updates via X platform, formerly known as Twitter. He emphasized that the main dYdX blockchain remained intact, noting that the $9 million insurance claims occurred on the auxiliary v3 chain, utilized to address deficits during YFI market liquidation procedures.
Juliano revealed that no negotiations would be held with the individuals responsible for the exploit. Instead, rewards would be given to those who significantly contribute to the investigation’s progression. He stated, "We refuse to compensate or negotiate with the assailant. Forensic investigations are underway with positive developments in unmasking the identity of the perpetrator, and the findings will promptly be submitted to the FBI."
The founder further explained that certain central elements within the exploited v3 chain could be a contributing factor to the breach. The hacking incident led to a 43% plummet of the Yearn.finance token on Nov. 17, sparking fears of a possible exit scam among the cryptocurrency community.
Matters escalated on Nov. 17 when long positions involving YFI tokens listed on the exchange were targeted, liquidating nearly $38 million worth of assets. This played a significant role in the substantial drop of the YFI token price. This orchestrated maneuver resulted in the obliteration of more than $300 million of the YFI token's market capitalization, giving credence to the hypothesis of an internal sabotage.
While security infringements within the DeFi space are not unusual, the noteworthy approach here lies in dYdX's commitment to unmasking the offenders through community involvement rather than offering a straight bounty to the hackers.
Published At
11/21/2023 9:28:03 AM
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