Dydx Announces Risk Mitigation Measures After $9 Million Hack

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  • Dydx has released new measures to mitigate risks hours after suffering an attack that caused a loss of $9 million
  • Part of the measures include increasing the margin rate for several cryptos on the platform
  • The exchange founder termed the incident as a “targeted attack”

Decentralized exchange Dydx has announced new measures meant to mitigate risks emanating from trading activities on the platform. The measures come hours after the exchange used $9 million from its insurance fund to cover losses incurred by its users in what its founder Antonio Juliano considered a “targeted attack.” Some of the measures include increasing the margin rate of some trading pairs like EOS, XRM, AAVE, and Sushi.

Profitable Trading Banned

Apart from raising the margin rate, the exchange has also banned “highly profitable trading strategies.” According to Juliano, the attacker used the now-banned trading strategy to target the YFI token leading to liquidations of long positions worth over $35 million. 

Juliano disclosed that they are investigating the “market manipulation [incident] of the entire YFI market.” According to an X (formerly Twitter) post, Dydx revealed that they’re offering “bounties to those most helpful in aiding the investigation,” but clarified they won’t “negotiate with the attacker.”

The exchange also noted that they’ll seek help from law enforcement agencies such as the FBI adding that they’re getting close to identifying the malicious actor.

The YFI incident on Dydx caused the price of YFI to drop by over 40% leading some in the crypto community to suspect a possible rug pull.

No Decentralized Governance

Dydx’s move to single-handedly move funds from the insurance fund and change some risk parameters revived the decentralization debate with some shocked as to why such critical undertakings didn’t go “through a decentralized governance process.”

Juliano disclosed that the incident happened on the older version of the protocol where “the order book and matching are centralized” clarifying that the Dydx chain requires a governance vote when changing such parameters.

With Dydx covering users’ losses and changing parameters to mitigate risks, the incident is unlikely to impact the platform’s usage.