Yearn.finance, the leading decentralized finance (DeFi) platform, faces the task of recovering $1.4 million after an unfortunate multisig script error during a token conversion operation on the CowSwap DEX.
This incident resulted in an involuntary exchange of the entire Yearn treasury balance, consisting of 3,794,894 lp-yCRVv2 tokens, leading to a significant 63% decrease in the liquidity pool value. The erroneous transaction occurred during the conversion of yVault LP-yCurve (lp-yCRVv2) tokens into stablecoins on CowSwap.
In response to this mishap, Yearn is seeking the collaboration of arbitrage traders who may have inadvertently benefited from the script error. The request is straightforward: return a portion of the profits gained due to the script error. One arbitrage trader responded positively to this call, returning 2 Ether (ETH), equivalent to $4,500, to Yearn’s treasury address. This act exemplifies the solidarity present in the community, where participants are often willing to contribute to the stability and integrity of the ecosystem.
Yearn Seeks Help from Its Community and Aims to Implement Strict Security Measures in the Future
To avoid future setbacks, Yearn has decided to outline specific security measures. These include creating specific manager contracts to handle protocol-owned liquidity separately. Implementing human-readable output messages for increased transparency during transactions and smart contract interactions. And enforcing stricter price impact thresholds to limit the potential impact of trading errors on the protocol’s assets.
This episode adds to previous security experiences, such as the $11.6 million exploit suffered last April. On that occasion, a hacker managed to create a massive one quadrillion Yearn Tether (yUSDT) tokens. Causing considerable financial damage to the platform.
Yearn attempted to respond proactively to the unfortunate incidents suffered. They appeal to the goodwill and collaboration of the community for fund restitution. It is necessary for the community as a whole to show resilience and commitment to ensure the security and continuity of the ecosystem.
