Antonio Juliano, founder of decentralized finance (DeFi) protocol dYdX, took to X (formerly Twitter) to share some results of an investigation into a $9 million loss in insured funds that many suspected was an exit scam that occurred on November 17. 17.
Juliano noted that the actual dYdX chain was not compromised and that the $9 million insurance claim occurred on the v3 chain. The v3 insurance fund is used to fill gaps in the YFI market clearing process.
The protocol co-founder also emphasized that dYdX does not intend to negotiate with the exploiters behind the attack, but will instead pay bounties to those who are most helpful in assisting the investigation:
“We do not pay bounties to attackers or negotiate with attackers. We and others have made significant progress in identifying the attackers. We are reporting the information we have to the FBI.”
Juliano added that the exploited core components of the v3 chain could be one of the potential reasons behind the leak. The security incident caused the Yearn.finance token to drop 43% on November 17. The sudden price plunge sparked concerns within the crypto community about a possible exit scam.
To be clear: the recent insurance fund event on dYdX occurred on v3, not on the dYdX chain
v3 has core components, dYdX Chain does not. We help operate v3, we do not help operate dYdX Chain.This is important in understanding why we take the actions we do
— Antonio | dYdX (@AntonioMJuliano) November 20, 2023
The Nov. 17 attack targeted long positions in the exchange’s YFI token, liquidating positions worth nearly $38 million. This is one of the key catalysts behind the YFI token price drop. The trade-in issue wiped out more than $300 million in YFI token market value, further fueling the insider job theory.
Security breaches in DeFi are nothing new. This incident is different, however, as dYdX is focused on leveraging the community to find the culprits, rather than paying bounties directly to the exploiters.
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