The press service of the dYdX trading platform reported on a recent incident involving the cryptocurrency yearn.finance (YFI) on their dYdX v3 platform. The company's specialists conducted an investigation and identified the culprit, after which they passed the information to law enforcement.
During the incident, the perpetrator used a strategy of opening significant long positions in YFI-USD with a fivefold leverage across more than 100 wallets. This led to the acquisition of a large amount of spot YFI, causing the asset's price to rise by more than 200%. Using unrealized profits, the criminal increased the volume of their positions to approximately $50 million.
However, the price of YFI soon plummeted by 30% within an hour, and the perpetrator was unable to close their positions. Due to a lack of liquidity, most positions were liquidated at a loss, and the platform's insurance fund was used to cover the losses.
Interestingly, the same perpetrator had employed a similar tactic in the SUSHI-USD market a week earlier, but it did not affect the insurance fund as the price of SUSHI did not fall. Analysis showed that the criminal likely did not profit from the fall in YFI prices.
As a result of the investigation, personal information about the user responsible for the attack was established. In response to the incident, the dYdX team implemented a series of updates to the risk management system on their platform. These updates include revising margin requirements on less liquid markets and automatically adjusting initial margin in case of abnormal trading activity.
Enhanced monitoring and an open interest (OI) alert system were also added. Additionally, similar functions and parameters, including an improved liquidation mechanism, variable margin share, and new risk management tools, were implemented in dYdX Chain.
