According to dYdX founder Antonio Juliano, the platform and the Yearn.Finance token (YFI) have suffered from a targeted attack, Cointelegraph reported.
Filling liquidation gaps
dYdX, a leading decentralized exchange that currently supports perpetual trading, had to cover $9 million in user liquidations on Nov. 17 through its insurance fund. The v3 insurance fund served to fill liquidation process gaps in the YFI market.
Was the YFI crash a rug pull?
After gaining more than 170% earlier this month, the Yearn.Finance (YFI) token lost almost 50% on Nov. 17. The sudden decline raised suspicions of a rug pull within the crypto community. The YFI price had pulled back after some changes at the beginning of October, as Banklesstimes.com wrote.
Market cap lost $300M+
The sudden crash led to more than $300 million in YFI market capitalization being wiped out. The purported attack was aimed at long positions in YFI tokens on dYdX, liquidating positions worth nearly $38 million.
No user funds affected
Juliano believes market manipulation caused the trading losses that impacted dYdX and the sharp decline in YFI. He posted on X:
This was pretty clearly a targeted attack against dYdX, including manipulation of the entire $YFI market. Last night about $9m from the dYdX v3 insurance fund was used to fill gaps on liquidations processed in the YFI market. The v3 insurance fund remains well funded with $13.5m remaining. No user funds were affected and our team is working to investigate the event.
Juliano added that dYdX would carry out an in-depth review of existing risk even though no user funds were affected. The DEX will make any changes necessary to the insurance fund and the dYdX Chain software.
Some members of the crypto community suspect an insider job in the YFI market, claiming developers controlled about a dozen wallets, which held 50% of the YFI token supply. According to Etherscan data cited by Cointelegraph, however, some of these wallets are held by crypto exchanges.