Decentralized cryptocurrency exchange dYdX has revealed new measures to reduce risks associated with trading after burning $9 million of its insurance fund on November 17 to cover user losses.
According to an announcement on ), Internet Token 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).
On November 17, dYdX launched an insurance fund to cover users’ trading losses after a profitable trade targeting a long position in the YFI token resulted in the liquidation of nearly $38 million worth of positions.
dYdX founder Antonio Juliano called the move a “targeted attack” on the exchange. According to him, YFI’s open interest on dYdX surged from $800,000 to $67 million in a matter of days due to the actions of one person. According to Juliano, the same person tried to attack the sushi market on dYdX a few weeks ago.
“We did take action to increase $YFI’s initial margin ratio before the price crashed, but that ultimately wasn’t enough. The participant was able to withdraw a large amount of $USDC from dYdX before the price crashed,” he wrote.
On X day, the exchange team said in a statement that “high-profit trading strategies are now banned on dYdX.” refer to Language used by Mango Markets exploiter Avraham Eisenberg in a 2022 $116 million attack.
dYdX now offers bounties in exchange for valuable information:
dYdX will pay bounties to those most helpful in assisting with the investigation
We do not pay bounties to attackers or negotiate with attackers
We and others have made significant progress in identifying attackers.We are reporting the information we have to the FBI
— Antonio | dYdX (@AntonioMJuliano) November 19, 2023
After surging more than 170% in November, the YFI token fell 43% in just a few hours on November 17. The sharp decline wiped out more than $300 million in market value from recent gains, according to Data from CoinMarketCap. However, the coin is still up over 90% over the past 30 days, trading at $9,190 at the time of writing.
The Yearn.finance team has yet to reveal 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, strongly refuting initial concerns about a potential scam.This statement is supported by Etherscan data show Large centralized exchanges are the largest holders of YFI.
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