Tether Freezes 1.7 Million USDT Out of the 2.7 Mln Stolen in Yearn DAI v1 Vault Exploit

While YFI is largely unaffected by the news of exploit, trading above $32k, the DeFi blue chip is only up 45% YTD, unlike other DeFi tokens that are skyrocketing.


Less than 24 hours back, core Yearn developer “Banteg” reported an exploit of the v1 yDAI vault, and today Tether CTO Paolo Ardoino did what the company has been doing for a long time now, freezing the stolen assets.

“Tether just froze 1.7M USDt stolen as part of the hack of Yearn DAI v1 vault,” tweeted Ardoino.

While the decentralized finance (DeFi) space is getting help from the centralized finance (CeFi) sector, the Yearn team shared the details of what exactly went down.

According to the details shared on Github, it was at 21:45 (UTC) that the DeFi blue-chip creator Andre Cronje noticed the complex transaction pattern of a contract interacting with Yearn vaults.

Called upon action, Yearn’s security team was able to mitigate the active exploit on Yearn's v1 yDAI vault just 11 minutes later but lost 2.7 million DAI, more than half of which Tether is determined to help save. The team noted,

“The fast response leads to 24m DAI out of the vault's total 35m DAI AUM being saved, with 11m DAI being lost as part of the exploit. The profit of the exploiter is estimated to be 2.7m DAI.”

What Exactly the Hacker did

The exploiter was able to profit by creating an imbalance in the exchange rate between stablecoins in Curve's 3CRV pool. The hacker then made the yDAI vault deposit into the pool at an unfavorable exchange rate and then reversed the imbalance exchange rate.

“This pattern was repeated in a series of 11 transactions executed over 38 minutes before being mitigated.”

The attacker withdrew the funds in a combination of USDT, DAI, and ETH for an estimated 2.7m DAI profit.

The price of YFI was largely unaffected by the news of exploitation. After an initial drop of just under 13%, YFI got back to trading above $32,000.

However, the digital asset with a market cap of $960 million is only up about 45% YTD compared to other DeFi tokens that are currently skyrocketing.

“From most loved to most hated. YFI now one of just 6 assets in DeFi top 50 that’s not returned at least 100% in 2021,” noted Ryan Watkins of Messari. This has led the DeFi token to slip to the 54th spot. Watkins said,

“YFI was a market leader for pretty much its entire life until January. Interesting seeing how sentiment can change so quickly on an asset after 1 month of underperformance. Bull markets breed impatience.”

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