dYdX Insurance Fund Loses $9 Million
Date: 2023-11-21 Author: Dima Zakharov Categories: CRYPTO PAYMENTS, BUSINESS
dYdX's Insurance Fund and Recent Loss
dYdX, a decentralized exchange, faced a significant setback with a $9 million loss in its insurance fund, representing a substantial portion, around 40%, of its overall value. This loss occurred due to the market liquidation of Yearn Finance (YFI), an event that the platform described as an intentional attack on dYdX.
Impact and Response
The platform emphasized that despite the hit, the insurance fund remains reasonably well-funded with $13.5 million still in reserve. Antonio Juliano, dYdX's CEO, labeled the incident a deliberate attack, involving market manipulation within the $YFI space. The platform is actively investigating the incident in collaboration with various partners while scrutinizing risk parameters governing its v3 platform.
Observations and Analysis
Arkham Intelligence noted that amid YFI's sharp 40% price drop, open interest in YFI, valued at $50 million, was obliterated. Despite YFI's infrequent trading on dYdX historically, nearly half of YFI's total open interest has recently been linked to this platform.
Precautionary Measures
As a preventive measure, dYdX has raised margin requirements for "less liquid" markets, including EOS, RUNE, AAVE, and others, to forestall potential future incidents.
