The Targeted Attack Cost dYdX Insurance Fund $9 Million

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Last Updated on November 20, 2023 by Bitfinsider

Following liquidations in the Yearn Finance (YFI) market, decentralized exchange dYdX experienced a $9 million blow to its insurance fund, accounting for around 40% of its total, the platform revealed on X.

According to the platform, the insurance fund is still “well funded,” with $13.5 million remaining. dYdX’s insurance fund, designed to step in when an account has a negative balance, “is not decentralized,” according to the company’s website, and “the dYdX team will be directly responsible for deposits to and withdrawals from the fund.”

In a subsequent post, dYdX CEO Antonio Juliano described the incident as “pretty clearly a targeted attack against dYdX” that involved “market manipulation of the entire $YFI market,” adding that the platform was investigating the incident “alongside several partners” and reviewing the risk parameters that govern the v3 platform. Juliano and dYdX did not react promptly to queries for additional information.

In a post on X, Arkham Intelligence observed that with yesterday’s spectacular 40% price drop in YFI, $50 million in YFI Open Interest — or unsettled contracts — was wiped out. YFI is generally “very rarely traded” on dYdX, according to Arkham, but the platform has recently accounted for about half of YFI’s overall Open Interest.

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