dYdX Implements New Strategies After $9M Insurance Fund Drawdown; YFI Token Value Climbs 90%
Summary:
Crypto exchange dYdX has implemented new risk mitigation strategies following a $9 million depletion from its insurance fund. The loss was due to a "premeditated attack" involving the YFI token, causing nearly $38 million in liquidations. The exchange fortified margin requirements and banned high-profit strategies to prevent similar incidents in the future. Despite a significant fall in YFI token value on November 17, the last month has seen an overall increase in its value by 90%.
Crypto trading platform dYdX has unveiled new strategies to prevent trading-related risks, following a $9 million drawdown from its insurance pool on November 17 to offset user deficits. In a statement released on X (formerly known as Twitter), the exchange stated it had fortified margin requirements in certain "low liquidity markets," which impacts tokens such as Eos (EOS), 0x Protocol (ZRX), Aave (AAVE), among others.
This move came after the dYdX platform used its insurance fund to compensate for trading deficits borne by users on November 17. These losses resulted from a lucrative trade on the YFI token that led to a nearly $38 million liquidation of positions. Describing the trade as a "premeditated attack," dYdX founder Antonio Juliano noted a drastic increase in YFI's open interest on dYdX, jumping from $0.8 million to $67 million within days due to one individual's actions. This same individual, Juliano claimed, had previously attempted a similar attack on the SUSHI market on dYdX.
Juliano said that strategies that yield excessively high profits are now prohibited on dYdX, echoing the words of Mango Markets' Avraham Eisenberg who exploited the platform for $116 million in 2022. To further aid their investigations, dYdX is now offering monetary rewards for useful leads but will not negotiate or reward the aggressor.
The YFI token plummeted by 43% within hours on November 17, erasing beyond $300 million from recent gains in market capitalization, as reported by CoinMarketCap. Despite this plunge, the token's value has increased by over 90% in the preceding month, now traded at $9,190 at the time of writing. The developers of Yearn.finance, holders of the majority of the token's supply, vehemently denied allegations of a potential scam, and this is substantiated by Etherscan data showing colossal centralized exchanges as the top holders of YFI. The official team has yet to divulge any details regarding the incident.
Published At
11/19/2023 5:34:44 PM
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