The protocol of yield farming, Yearn Finance was the victim of a flash loan attack in which it lost nearly $11 million in the DAI stablecoin, but the crypto community is organizing to mitigate losses for those affected.
The developers of Year Finance, the protocol for yield farming, or yield farming de DeFi, reported a recent exploit in which nearly $11 million in the DAI stablecoin was affected. Yearn Finance joins the list of DeFi protocols that have been victims of flash loan attacks, in which the attacker uses this feature to request a loan and make a series of quick transactions on different platforms to extract value from the target protocol .
In the case of Yearn Finance, the developers reported that the attacker managed to exploit a vulnerability present in the Smart contract of the yDAI v1 performance vault, involving a series of transactions with cryptocurrencies, , the Ethereum (ETH) and stablecoins DAI (DAI), Tether (USDT) y USD Coin (USDC) in the dYdX, Compound and Curve protocols. Although the exploit allowed the attacker to extract value in DAI, the crypto community is organizing to find a quick solution to this situation, and reimburse losses to users affected by the attack.
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Flash loan attack details
Within hours of discovering the attack, Yearn Finance published a report detailed on GitHub to make the situation known. The developers reveal that the attack was mitigated in approximately 11 minutes, and that it consisted of a series of 160 transactions where the attacker deposited and withdrew value in the pools at unfavorable rates. The attack caused losses to the protocol in the order of $11 million in DAI, although the attacker only managed to make a profit of $2,7 million in the stablecoin.
Immediately upon detecting the attack, the Yearn Finance developer team suspended all deposits in the affected yield vault, in USDC, USDT and TUSD and began a rapid investigation, which is still ongoing, to fully understand the modus operandi of this attack, billed as one of the most complex crypto arbitrage attacks seen in DeFi so far.
Thanks to the developers' quick action, the protocol was able to protect the rest of the stored funds, worth $24 million in DAI, out of the total $35 million that was stored within the vault.
Crypto community reaction
With the wave of flash loan attacks unleashed on DeFi in recent months, the crypto community is now prepared to act quickly and help mitigate damage and losses. Recently, Paolo Ardoino, CEO of Tether, announced the freezing of funds in USDT in the order of 1,7 million dollars, which are part of the exploit that the yDAI v1 vault suffered. by Yearn Finance.
The Yearn crypto community is also organizing to advance the proposed creation of a collateralized debt position (CDP), which will be backed by the coinage recently approved and made of 6.666 YFI tokens, although this is still undergoing evaluation and has not been approved.
At the time of this edition, the price of YFI is trading at $30.600 USD, falling 2,7% of its value after the exploit.
Continue reading: Ethereum Vaults Launched: How Did Yearn Finance Become So Big on Ethereum?
