dYdX identifies mastermind who extracted $9 million from v3 chain

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dYdX decentralized exchange today satisfy Announce The results of a detailed investigation into a “targeted attack” on its v3 platform in November resulted in Insurance fund loses $9 millionaccounting for approximately 40% of its total volume.

dYdX wrote in the post:

“Investigations have revealed the identity of the attackers and we are contacting them.”

The exchange said it is currently considering legal measures against the perpetrators.

The platform pointed out that the attacker opened a large number of 5x leveraged long positions in YFI– USD in over 100 wallets. YFI It is the native token of the DeFi protocol Yearn Finance. According to dYdX, the attacker used a different address to purchase spot YFI tokens, causing its price to surge by 215%.

The exchange said the attackers spread unrealized profits across larger YFI-USD positions, up to approximately $50 million. On November 17, the platform increased the initial margin requirements in the YFI-USD market, reduced the underlying positions and increased the position size to contain attackers.

The next day, the price of YFI fell by nearly 30% in one hour, and the attacker was unable to close the position. dYdX said that when attackers’ positions plummet into negative values, the insurance fund will automatically compensate them for their losses.

The platform added that a week before the YFI incident, attackers targeted SUSHI-USD used a similar strategy and withdrew about $5 million in profits, but this did not affect the v3 insurance fund as dYdX increased the initial margin requirement to 100%, preventing the attacker from making more money.

The company explained that no customer funds were affected by the attack and insisted that bad actors did not profit from YFI market manipulation.

To prevent any attacks using similar tactics, dYdX said it has updated its v3 trading platform to enable better OI monitoring and alerts.

The exchange added that the upgraded v4 chain is designed to prevent risks similar to this incident. The upgraded chain is equipped with a new software feature that automatically adjusts the initial margin ratio in the event of unusual price fluctuations, the company said.