dYdX increases margin requirements on some markets and bans “highly profitable trades”
Decentralized crypto exchange dYdX has disclosed new measures to mitigate trading risks after burning $9 million from its insurance fund on November 17 to cover user losses.
According to an announcement on ), Internet. Computer (ICP), Monero (XRM), Tezos (XTZ), Zcash (ZEC), SushiSwap (SUSHI), THORChain (RUNE), Synthetix (SNX), Enjin (ENJ), 1inch Network (1INCH), Celo (CELO) , Yearn.finance (YFI) and Uma (UMA).
dYdX triggered its insurance fund to cover users’ trading losses on November 17 after a profitable trade targeting long positions on the YFI token caused positions worth nearly $38 million to be liquidated.
dYdX founder Antonio Juliano called the move a “targeted attack” on the exchange. According to him, YFI’s open stake in dYdX increased from $0.8 million to $67 million in a matter of days as a result of the actions of one individual. The same individual, according to Juliano, attempted to attack the SUSHI marketplace on dYdX a few weeks earlier.
“We took steps to increase initial margin ratios for $YFI before the price crash, but ultimately this was not enough. The stakeholder was able to withdraw a good amount of $USDC from dYdX just before the price crash prices,” he wrote.
On X, the exchange team said that “highly profitable trading strategies have now been banned on dYdX,” in a statement. reference to the language used by Mango Markets exploiter Avraham Eisenberg during his $116 million attack in 2022.
dYdX now offers a bounty in exchange for valuable information:
dYdX will pay bonuses to those who contribute the most to the investigation
We will not pay bounties or negotiate with the attacker.
We and others have made significant progress in identifying the perpetrator. We are in the process of reporting the information we have to the FBI.
—Antonio | dYdX (@AntonioMJuliano) November 19, 2023
The YFI token fell 43% in just a few hours on November 17 after soaring over 170% in November. The sharp decline erased more than $300 million in market capitalization from recent gains, according to CoinMarketCap data. However, over the past 30 days, the token has still gained over 90%, trading at $9,190 at the time of writing.
The Yearn.finance team has not released any official details about the incident. A source familiar with the matter told Cointelegraph that the team’s developers do not control the majority of the token supply, refuting initial concerns about a potential scam. This claim is supported by data from Etherscan showing large centralized exchanges as the largest holders of YFI.
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