dYdX Utilizes Insurance Fund to Cover $9M Liquidations Amid Alleged Targeted Attack
Summary:
After a sudden drop in the price of the Yearn.Finance (YFI) token, decentralized exchange dYdX used its insurance fund to cover $9 million in user liquidations. The founder of dYdX, Antonio Juliano, believes the incident was a "targeted attack" involving market manipulation. Despite this, Juliano assured that user funds remain unaffected, and a comprehensive review of risk parameters will be carried out. The event sparked suspicions within the crypto community of an internal job within the YFI market.
The decentralized exchange, dYdX, was compelled to utilize its insurance fund when $9 million of user liquidations occurred on November 17. As stated by Antonio Juliano, the founder of dYdX, this loss emanated from a specific attack aimed at the exchange. It has been noted by the dYdX team via X (previously known as Twitter) that the v3 insurance fund was used to balance the liquidations within the YFI market. The value of the Yearn.Finance (YFI) token witnessed a fall of 43% on November 17 after a 170% increase in the weeks prior. This sudden plunge sparked speculations among the cryptocurrency community regarding a potential exit scam. The assumed attack dealt with extensive positions in YFI tokens on the exchange, leading to liquidations worth close to $38 million. Juliano asserts that the trading losses incurred by dYdX and the abrupt decrease in YFI are due to market manipulation. He stated this was an obvious attack on dYdX, incorporating a complete market manipulation of the YFI market. The issue is being thoroughly investigated with multiple partners, promising transparency in the findings. Juliano further adds that the v3 insurance fund currently holds $13.5 million. The user funds remain unscathed by the incident. An exhaustive review of the risk parameters is to be conducted, despite there being no impact on the users' funds. Modifications will be made to v3 and perhaps to the dYdX Chain software, only if required, he further indicated on X. The profit-making transaction removed over $300 million in market capitalization from the YFI token. This led to suspicions within the community of an insider job within the YFI market. Claims were made that 50% of the YFI token supply was in the control of 10 wallets owned by developers. However, Etherscan data contradicts this claim by suggesting these holders are crypto exchange wallets. Cointelegraph is in the process of contacting dYdX and Yearn.Finance’s teams for comments and is waiting for a response.
Published At
11/18/2023 6:56:13 PM
Disclaimer: Algoine does not endorse any content or product on this page. Readers should conduct their own research before taking any actions related to the asset, company, or any information in this article and assume full responsibility for their decisions. This article should not be considered as investment advice. Our news is prepared with AI support.
Do you suspect this content may be misleading, incomplete, or inappropriate in any way, requiring modification or removal?
We appreciate your report.