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dYdX Exchange Loses $9 Million in ‘Targeted Attack’ on v3 Platform

Decentralized crypto exchange dYdX recently suffered a major “targeted attack” on its v3 trading platform, resulting in a loss of approximately $9 million from its insurance fund holdings. The article details key facts around the incident, response, and prevention measures.

What Happened?

In November 2021, an attacker used inflated long positions in Yearn Finance’s YFI token across over 100 wallets to cause a 215% spike in YFI’s price. They then reinvested unrealized profits into additional YFI-USD positions, reaching a value of around $50 million.

dYdX altered the YFI-USD market’s margin requirements and position sizes on November 17 to counteract the attack. However, YFI’s price plummeted nearly 30% the next day, leading the insurance fund to cover the attacker’s losses to the tune of $9 million.

Prevention Measures

While no customer funds were affected, dYdX has since updated its platform to better monitor open interest, improve alerting systems, and automatically adjust initial margin requirements in response to significant price changes. These changes aim to prevent similar attacks in the future.

The full post-mortem findings and responses demonstrate dYdX’s commitment to protecting users and strengthening the platform: https://dydx.exchange/blog/sushi-yfi-incident

Key Takeaways

In summary, the key points are that dYdX experienced a targeted $9 million loss due to an attacker exploiting a loophole on its trading platform. Since then, the team has identified and contacted the perpetrator while also implementing security improvements to safeguard users and funds going forward.


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