Decentralized exchange (DEX) dYdX was forced to use its insurance fund to cover $9 million in user liquidations on Nov. 17. According to dYdX founder Antonio Juliano, the losses resulted from a “targeted attack” against the exchange.
Based on reports from the dYdX team on X (formerly Twitter), the v3 insurance fund was used “to fill gaps on liquidations processes in the YFI market.” The Yearn.Finance (YFI) token dropped 43% on Nov. 17 after soaring over 170% in the previous weeks. The sudden price crash raised concerns within the crypto community about a possible exit scam.
The alleged attack targeted long positions in YFI tokens on the exchange, liquidating positions worth nearly $38 million. Juliano believes trading losses affecting dYdX, as well as the sharp decline in YFI, have been caused by market manipulation:
“This was pretty clearly a targeted attack against dYdX, including market manipulation of the entire $YFI market. We are investigating alongside several partners and will be transparent with what we discover.”
According to Juliano, the v3 insurance fund still holds $13.5 million, and users’ funds were not affected by the incident. “Even though no user funds were affected, we will also be conducting a thorough review of our risk…
