A decentralized finance (DeFi) platform, dYdX, experienced a $9 million insurance loss on Nov. 17, attributed to a secure dYdX chain and an incident on the v3 chain impacting Yearn.finance’s YFI token market, dispelling exit scam concerns.
To be very clear: the recent insurance fund incident on dYdX was on v3 and not the dYdX Chainv3 has central components, dYdX Chain does not. We help to operate v3, we do not help to operate dYdX Chain. This is important to understand why we have taken the actions we have
— Antonio | dYdX (@AntonioMJuliano) November 20, 2023
The exploit, targeting YFI’s long positions, liquidated about $38 million, causing a 43% drop in YFI’s value. Juliano stated they won’t negotiate with the attackers but will reward those aiding the investigation.
Despite suspicions, Juliano stated, “We will not pay bounties to, or negotiate with the attacker. We and others have made significant progress into identifying the attacker. We are in the process of reporting the information we have to the FBI.”
This unique approach to community involvement in finding the culprits distinguishes dYdX from traditional bounty payments. The security breach led to a $300 million market cap reduction for YFI, raising concerns about insider involvement.
dYdX’s refusal to negotiate with attackers and reliance on community involvement, rather than direct bounties, sets a unique precedent in addressing DeFi security breaches.
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