Content Directory:

· Lookonchain: Anonymous users manipulate YFI prices for profit

· YFI open interest contracts reach $67 million, dYdX's high-profit trading strategy is banned

· Community questions: dYdX has never truly achieved decentralization

On November 18th, something happened on the decentralized perpetual contract exchange dYdX that sparked widespread discussion in the community.

The data analysis platform Arkham announced that due to the sharp drop in YFI, about 50 million US dollars of open positions on dYdX were closed. It is reported that prior to this, nearly half of YFI's open positions were held on dYdX.

Arkham added that the trading volume of YFI on dYdX is usually very low, but the recent surge in the token's price has led to its open interest reaching a peak of about $60 million in the past few days.

Lookonchain: Anonymous users manipulate YFI price for profit

According to Lookonchain (@lookonchain) tracking, as shown in this report, the incident originated from intentional manipulation by an anonymous user. The user profited by manipulating the YFI price on dYdX.

Source: Lookonchain

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Specifically, on November 14th and November 15th, wallets "0xCCb6" and "0xB017" deposited a large amount of USDC into dYdX through multiple addresses, suspected to be for longing YFI.

Source: Lookonchain

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Afterwards, the price of YFI began to rise. When the price of YFI reached its highest point on November 17th, wallet "0xB017" extracted USDC from dYdX through multiple wallets and deposited it into dYdX through other wallets, possibly closing out long positions, and then shorted YFI at the highest price through other wallets.

After the sharp drop in YFI price on November 18th, wallet "0xB017" extracted a large amount of USDC from dydx through multiple addresses, which is likely to be the profit from shorting YFI.

Source: Lookonchain

(Note: This is a direct translation without considering the context or industry-specific terms. English words and phrases, as well as capitalized English words and phrases, are not translated and are returned as is. Links in the form of an "a" tag are not translated and are returned as is. When the content only consists of punctuation marks, the punctuation marks are returned as is. HTML tags such as

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, etc. are not translated and are returned as is. If an HTML tag contains English characters, the English characters are omitted and the tag is returned as is. The content within an "a" tag is not translated and is returned as is. All Chinese characters are translated.)In addition, Lookonchain's analysis shows that on November 1st, there was a significant fluctuation in the price of SUSHI. The anonymous user attempted to manipulate the price of SUSHI in the same way to profit, but was unsuccessful. Lookonchain has posted a reminder for dYdX to closely monitor the positions of these wallets ("0xCCb6" and "0xB017") on dYdX.

YFI open interest reaches $67 million, dYdX's high-profit trading strategy banned

During this incident, dYdX's remedial measures and response were relatively prompt.

dYdX announced on November 19th on their social media platform that they have used approximately $9 million from the dYdX V3 insurance fund to cover the shortfall in the YFI market liquidation. "The V3 insurance fund still has sufficient funds, with remaining funds of $13.5 million, and no user funds have been affected. The team is working hard to investigate the incident." The announcement was made by dYdX officials.

Meanwhile, dYdX officials also pointed out that high-profit trading strategies have been banned and initial margin requirements for illiquid markets have been increased, including EOS, ZRX, AAVE, ALGO, ICP, XMR, XTZ, ZEC, SUSHI, RUNE, SNX, ENJ, 1INCH, CELO, YFI, UMA, and SUSHI.

Subsequently, dYdX founder Antonio Juliano (@AntonioMJuliano) also posted on social media, stating that within a few days, the open YFI contracts on dYdX surged from $800,000 to $67 million. Prior to the sharp drop in YFI price, dYdX had increased the initial margin ratio for YFI, but this failed to prevent the incident. Antonio pointed out that this was obviously a "targeted attack" on dYdX, including market manipulation of the entire YFI.

In addition, Antonio stated that dYdX will offer rewards to those who assist in the investigation, but will not offer rewards to attackers or negotiate with them. dYdX has also reported the information it holds to the Federal Bureau of Investigation.

Community questions: dYdX has never truly achieved decentralization

Regarding this incident, there have been many controversial voices in the community towards dYdX.

For example, independent developer @larry0x believes that few people discuss how dYdX transfers millions of dollars in insurance funds without going through the decentralized governance process, as well as changing a series of risk parameters (which may lead to liquidation if users do not adjust their positions accordingly).

Web3 risk fund investor @kaiynne also believes that dYdX has never truly decentralized, and its operation is like a "fintech startup", making it difficult to change the culture of top-down decision-making processes.

Antonio responded by pointing out that "dYdX continues to prioritize risk and security," and dYdX will also be releasing a series of updates, including:

The market update will become easier, making the market more conducive to generating higher liquidity;

The maintenance margin function will become updatable (not available in V3);

The maintenance margin function will be able to change with the size of the position (not available in V3);

The clearing mechanism will be redesigned;

If there are any negative assets in the account, withdrawal requests will not be processed (until the relevant positions are liquidated).

At the same time, in response to "dYdX has never truly decentralized," Antonio also responded that dYdX has just been released recently and is currently fully transitioning to a sovereign chain: "Decentralization technology is catching up, and we are helping to lead it."

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