dYdX was the victim of what appears to be a coordinated attack. The attack resulted in losses of $9 million from the platform’s insurance fund. dYdX CEO Antonio Juliano stated that this was likely a targeted effort involving market manipulation of the entire YFI market.
On November 18th, dYdX posted on Twitter that approximately $9 million from their version 3 insurance fund was used to cover liquidations in the YFI market. While no user funds were affected, the loss represented a significant portion of the $13.5 million remaining in the insurance fund reserves.
dYdX CEO says its a possible coordinated attack
In response, Antonio Juliano tweeted that this incident seemed to clearly be “a targeted attack, including market manipulation of the entire $YFI market.”
It appears malicious actors manipulated YFI prices specifically to trigger cascading liquidations on margin trades. With the insurance fund depleted, those losses would then affect user deposits.
Juliano stated that the team is investigating the attack alongside several partners and will share details as they uncover them. The team will also be reviewing risk parameters. The team will also consider changes to the Layer 2 exchange software as well as the recently launched dYdX Chain.