DeFi Exchange dYdX Announces Postmortem Analysis of $9 Million November Attack

Today’s Decentralized Exchange dYdX published After-action investigation into a “targeted attack” that occurred on the v3 platform in November Loss of $9 million in insurance fundsThis accounts for approximately 40% of the total.

“After investigation, the identity of the attackers has been identified and we are in contact with them,” dYdX said in the post. We are currently considering legal options against the perpetrator.

The platform noted that the attackers had opened significant 5x leveraged buy positions. YFI

-7.88%
-USD available for over 100 wallets. YFI It is the native token of the DeFi protocol Yearn Finance. According to dYdX, the attackers used different addresses to purchase spot YFI tokens, causing the price to surge by 215%.

The attackers snowballed the unrealized profits into more YFI-USD positions, up to about $50 million, the exchange said. On November 17, the platform increased initial margin requirements and reduced default and incremental position sizes for the YFI-USD market to limit attackers.

The next day, the price of YFI plummeted nearly 30% in one hour, and the attackers were unable to liquidate their positions. As the attacker’s holdings plummeted into negative territory, the insurance fund automatically compensated for the losses, dYdX said.

The platform added that it was targeted by attackers a week before the YFI incident. episode

-12.42%
– The same strategy used USD to withdraw approximately $5 million in profits, but it did not affect the v3 insurance fund as dYdX increased the initial margin requirement to 100%, preventing the attackers from gaining more profits.

The company explained that customer funds were not affected by the attack and suggested that the attackers did not profit from manipulating the YFI market.

To prevent further coordinated attacks using similar strategies, dYdX said it has updated its v3 trading platform for better open interest monitoring and alerting.

The exchange added that the upgraded v4 chain is already designed to prevent risks similar to this incident. Upgrade Chain comes with a new software feature that automatically adjusts the initial margin rate in case of abnormal price movements.

The company did not immediately respond to The Block’s request for further comment.

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