Amidst the craze and shift toward non-fungible tokens (NFT), DeFi sweetheart yEarn’s founder Andre Cronje’s latest project saw rug pulled on $16 million.
The project was Eminence Finance (EMN), an unreleased and unfinished gaming multiverse project whose smart contracts were deployed last night but without any announcement.
But nothing remains out of the sight of crypto, especially the DeFi degens, more so when Cronje is involved.
The community soon discovered the project that had zero information available about it except for the two tweets subtweeted by Cronje, who, in his explanation, today, said the project is “at least ~3+ weeks still away.”
The twitter account of eminence.finance already has over 5,900 followers.
— eminence.finance (@eminencefi) September 28, 2020
As is natural in high-risk DeFi projects, people rushed in with their funds to get in on a new YFI-related project. In a matter of a few hours, $15 million funds were used to mint EMN tokens.
Liquidity soon hit the largest DEX Uniswap, and the EMN-ETH market saw volume rising to millions, still at $11.7 million. Meanwhile, the price of EMN that went to $0.00003739 has crashed to $0.00003052.
And just as is normal in the DeFi world, an attacker exploited the unaudited code and swept away with all the $16 million.
The exploit was a “simple one” – “mint a lot of EMN at the tight curve, burn the EMN for one of the other currencies, sell the currency for EMN.”
5) News spreads, people are confused and hurt and angry and impressed and lots of other things at once.
a) Andre didn't intend any of this to happen
b) people dug around and found his incomplete projects
c) people bought his incomplete projects
d) flash loans
— SBF (@SBF_Alameda) September 29, 2020
The hacker sent $8 million of the stolen funds to Cronje’s deployer account, all of which yEarn treasury will be refunding to the holders after he received “a fair amount of threats.”
Despite the debacle, Cronje hasn’t given up on the project and is still building Eminence Finance.
“I am also going to continue deploying test contracts. I have over ~100 deployed contracts, of which probably >half have vulnerabilities. Please wait for official announcements,” he said today.
Trader and economist Alex Kruger noted that the hack losses are small in comparison to the 20% crash in YFI, following the news, currently trading at $25,275, “where the real damage was inflicted.”
“Price will likely recover fast, markets have short memories for this sort of events. Hopefully there are some lessons in there for everyone involved,” he added.