dYdX founder claims targeted attack led to $9M insurance claim
Decentralized exchange (DEX) dYdX was forced to utilize its insurance fund to cover $9 million in user liquidations on Nov. 17. According to dYdX founder Antonio Juliano, the losses arised from a “targeted attack” against the exchange. Based upon reports from the dYdX group on X (formerly Twitter), the v3 insurance fund was used “to fill spaces on liquidations processes in the YFI market.” The Yearn.Finance (YFI) token dropped 43% on Nov. 17 after soaring over 170% in the previous weeks. The abrupt cost crash raised issues within the crypto neighborhood about a possible exit scam. The supposed attack targeted long positions in YFI tokens on the exchange, liquidating positions worth nearly $38 million. Juliano thinks trading losses affecting dYdX, as well as the sharp decline in YFI, have been brought on by market control: “This was pretty clearly a targeted attack versus dYdX, including market adjustment of the whole $YFI market. We are examining alongside several partners and will be transparent with what we find.” According to Juliano, the v3 insurance fund still holds $13.5 million, and users funds were not impacted by the event. “Even though no user funds were affected, we will likewise be carrying out a comprehensive review of our threat parameters and making appropriate changes to both v3 and potentially the dYdX Chain software if essential,” he kept in mind on X.Balance modifications on dYdXs insurance wallet. Source: DYDX ExplorerThe successful trade eliminated over $300 million in market capitalization from the YFI token, leading the neighborhood to raise eyebrows about a possible expert job in the YFI market. Some users declared that 50% of the YFI token supply was held in 10 wallets managed by designers. Nevertheless, Etherscan information suggests some of these holders are crypto exchange wallets.Cointelegraph reached out to dYdX and Yearn.Finances teams for remark and is awaiting a resoonse.Magazine: Beyond crypto– Zero-knowledge proofs reveal prospective from voting to fund
Related Content
- These Six Mining Charts Illustrate The Bitcoin Bear Market
- Binance Australia got 12 hours’ notice before it was debanked, exec says
- ‘Don’t short when it’s dark green’ — How to trade the 2024 Bitcoin halving
- Funding rates echo $69K BTC price — 5 things to know in Bitcoin this week
- The Rise of Decentralized Finance: How Crypto is Changing the Game
Other Questions People Ask
What did the dYdX founder claim about the targeted attack leading to the $9M insurance claim?
The dYdX founder, Antonio Juliano, asserted that a "targeted attack" against the exchange resulted in significant user liquidations, prompting the use of their insurance fund to cover $9 million in losses. He indicated that this attack specifically targeted long positions in the Yearn.Finance (YFI) market, which saw a drastic price drop of 43% on November 17. Juliano emphasized that the incident raised concerns within the crypto community about potential market manipulation and exit scams.
How did the targeted attack affect the dYdX insurance fund?
Following the targeted attack, dYdX utilized its v3 insurance fund to manage $9 million in user liquidations, ensuring that user funds remained unaffected. Despite the losses incurred, Juliano reported that the insurance fund still holds $13.5 million after addressing the liquidations. This proactive measure highlights dYdX's commitment to safeguarding user assets while they investigate the circumstances surrounding the attack.
What were the market implications of the dYdX founder's claims about the attack?
The claims made by the dYdX founder regarding the targeted attack led to a significant market reaction, with over $300 million in market capitalization wiped from the YFI token. The abrupt price decline raised suspicions of potential insider trading or manipulation, especially since a large portion of YFI's supply was reportedly concentrated in a few wallets. This situation has prompted dYdX to conduct a thorough review of their risk parameters and consider necessary adjustments to their trading protocols.
What steps is dYdX taking in response to the targeted attack and insurance claim?
In light of the targeted attack and subsequent insurance claim, dYdX is undertaking a comprehensive review of its risk management strategies. Antonio Juliano mentioned that they are collaborating with various partners to investigate the incident thoroughly and will maintain transparency throughout this process. Additionally, they are considering potential changes to both their v3 platform and dYdX Chain software to enhance security and prevent future occurrences.