Decentralized exchange dYdX used its insurance fund to cover $9 million in losses resulting from a “targeted attack” against the exchange.
In a Saturday post on
“The v3 insurance fund remains well funded with $13.5 million remaining in funding. User funds have not been impacted and our team is working to investigate the event,” they added.
Likewise, dYdX founder Antonio Giuliano confirmed the attack in a post on X, calling the event a “clearly targeted attack against dYdX.”
The Yearn.Finance (YFI) token saw a 43% drop on November 17 after seeing a notable rise of over 170% in the previous weeks.
How did the DYDX hackers carry out the attack?
The alleged attack specifically targeted long positions in the exchange’s YFI tokens, resulting in the liquidation of positions worth approximately $38 million.
Giuliano suspects that the trading losses incurred by dYdX, along with the significant decline in YFI, were the result of market manipulation.
In addition, it announced that a comprehensive review of the risk parameters will be conducted and that, if necessary, appropriate adjustments will be made to both version 3 and possibly the dYdX Chain software.
As a first step against any future mishap, dYdX has increased margin requirements for “less liquid” markets, including EOS, RUNE, AAVE and others.
The profitable trade that led to the attack wiped out more than $300 million from the market value of the YFI token, raising doubts within the community about the possibility of insider work in the YFI market.
Some users claimed that 50% of the YFI token supply is in 10 developer-controlled wallets.
However, Etherscan data indicates that some of these owners are cryptocurrency exchange wallets and not developer-controlled addresses.
The dydx hack comes as hacks and scams continue to plague the cryptocurrency industry.
According to a report by blockchain security platform Immunefi, there were 76 attacks on cryptocurrency and Web3 projects and companies in the third quarter of 2023, a significant increase compared to the 30 attacks reported in the same period of 2022.
In total, approximately $332 million was lost due to numerous exploits, hacks, and scams throughout September, marking a record month for cryptocurrency vulnerabilities.
Earlier this month, DeFi platform Raft was also subject to an attack that resulted in the loss of approximately $3.3 million in Ethereum (ETH).
The Raft hack marks the second largest cryptocurrency exploit on the same day. Previously, an attacker drained approximately $114 million in digital assets from the Poloniex central exchange.