dYdX V3 Insurance Fund Was Attacked But Not Related To dYdX Chain
- dYdX founder clarifies the recent $9 million loss occurred on V3, citing its centralized elements.
- dYdX faces a 40% insurance fund loss from YFI market liquidations amid a 45% drop on November 17, raising exit scam concerns.
- The use of the dYdX V3 insurance fund sparks suspicions of market manipulation.
In a recent development, dYdX founder Antonio clarified that the recent $9 million hit to the decentralized exchange’s insurance fund occurred on V3, not on the dYdX Chain. V3 involves centralized components, whereas the dYdX Chain does not possess such elements.
$9M Of The dYdX V3 Insurance Fund Was Loss, Not dYdX Chain
The substantial blow to the dYdX V3 insurance fund, constituting approximately 40% of its total value, resulted from liquidations in the Yearn Finance (YFI) market, as announced on X. Despite this setback, dYdX asserted that the insurance fund remains “well funded,” with $13.5 million still intact.
The dYdX platform, through its website, explained that the dYdX V3 insurance fund, responsible for addressing negative balances, is not decentralized. The dYdX team directly manages deposits to and withdrawals from the fund.
Liquidation Sparks Exit Scam Concerns and Market Manipulation Suspicions
Reports from the dYdX team on X revealed that the dYdX V3 insurance fund was utilized to address gaps in liquidation processes in the YFI market. This move followed a sharp drop of over 45% in the Yearn.finance token on November 17, prompting concerns of a potential exit scam within the crypto community.
The alleged attack specifically targeted long positions in YFI tokens on the exchange, resulting in the liquidation of positions valued at nearly $38 million. Juliano, a key figure in the dYdX community, expressed the belief that trading losses and the significant YFI decline were the result of market manipulation.
The aftermath of the profitable trade saw a substantial reduction of over $300 million in market capitalization for the YFI token. This unexpected turn of events has led to speculation within the community about the possibility of an insider job in the YFI market.
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