dYdX raises margin requirements in some markets, prohibiting “highly profitable trades”.
Decentralized crypto exchange dYdX has announced new measures to reduce risks associated with its business after burning $9 million in insurance funds to cover user losses.
According to an announcement on X (formerly Twitter), the exchange has increased margin requirements in several “less liquid markets”, affecting tokens such as EOS (EOS), 0x Protocol (ZRX), Aave (AAVE), Algorand (ALGO), Internet. Computer (ICP), Monero (XRM), Tezos (XTZ), Zcash (ZEC), SushiSwap (SUSHI), THORChain (RUNE), Synthetix (SNX), Engine (ENJ), 1Inch Network (1INCH), Cello (CELO) , Yearn.finance (YFI) and Uma (UMA).
dYdX Insurance Fund to cover users' business losses in 2018. On November 17, a profitable trade targeting long positions in the YFI token led to a reduction in positions of approximately $38 million.
dYdX founder Antonio Giuliano called the move a “targeted attack” on the exchange. According to him, YFI's open interest on DIDX increased from $0.8 million to $67 million in a few days due to the actions of one individual. According to Giuliano, the same individual tried to attack the SUSHI market on DIDX a few weeks ago.
“We took steps to increase initial margins for $YFI before the price drop, but this was ultimately not enough. The actor was able to withdraw a good amount of $USDC from dYdX before the price drop,” he wrote.
On X, the exchange team said “highly profitable trading strategies are now banned on dYdX,” referencing language used by Mango Markets exploiter Avraham Eisenberg in 2022's $116 million attack.
dYdX is now offering a bounty for valuable information:
dYdX pays out bonuses to those who are most helpful in the investigation.
We do not pay or negotiate with the attacker.
We and others have made significant progress in identifying the attacker. We are in the process of reporting the information we have to the FBI
– Antonio | dYdX (@AntonioMJuliano) November 19, 2023
The YFI token dropped by 43% in a few hours after rising more than 170% on November 17th. The steep decline wiped more than $300 million in market capitalization from recent gains, according to CoinMarketCap data. In the last 30 days, however, the token has still gained more than 90%, trading at $9,190 at the time of writing.
The Yearn.finance team has not disclosed any official information about the incident. A source familiar with the matter told Cointelegraph that developers in the group do not control most of the token's offerings, strongly dismissing initial concerns about fraud. The claim is supported by Etherscan data showing large centralized exchanges as YFI's top holders.
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