dYdX sees value of its insurance fund decrease by 40%:
- The dYdX DEX suffered a loss of $9 million in its insurance fund.
- This loss represents about 40% of the total insurance fund.
- No user funds were affected.
The decentralized exchange protocol dYdX V3 recently experienced a $9 million loss in its insurance fund, representing about 40% of the total fund.
The good news is that no user funds were affected.
This loss occurred as a result of a 40% drop in the value of Yearn Finance (YFI). Indeed, the collapse in the crypto price caused a massive wave of liquidations, forcing dYdX to use money from its insurance fund to cover them.
The dYdX team is actively working to investigate this event, which CEO Antonio Juliano described as a “clearly targeted attack against dYdX“, involving market manipulation of $YFI as a whole.
DYDX’s swift actions
In response to this incident, dYdX stated that its insurance fund remains well funded, with a remaining balance of $13.5 million. The fund, which comes into play when a liquidated account has a negative balance, is managed directly by the dYdX team, which is responsible for deposits and withdrawals.
To prevent future incidents, dYdX recently announced on its Twitter account that it has increased margin requirements for “less liquid” markets. These include markets such as EOS, RUNE, and AAVE, to name a few.
Today, the company is reviewing the risk parameters governing the V3 platform and is collaborating with several partners to further investigate this incident.