YFI: users encouraged to take out insurance against hackers

Computer attacks prove that even the largest DeFi platforms are vulnerable.

Tether froze $ 1.7 million in USDT stolen from the operation.

Yearn Finance advises users to take out insurance to cover potential losses

On February 5, one of the most important platforms in decentralized finance suffered a lightning strike causing the loss of millions of dollars from one of its liquidity reserves . The incident shows that even big players are insecure, and Yearn is now advising users to get insurance.

YFI was the last to be exploited by a flash loan arbitrage attack that successfully thwarted the surveillance system, leaving no code hacked. The incident was the latest in a long line of similar exploits to hit the DeFi industry in 2020.

The Rekt blog analyzed the incident in its usual post-event fashion, confirming that the safe was attacked using nine flash loans.

In total, $ 11 million was lost in the safe. $ 2.7 million went to the attacker, $ 3.5 million went to liquidity providers Curve, $ 3.5 million went to actors in Curve, and $ 1.4 million was paid in fresh Aave v2.

He stressed that even the biggest platforms in the industry are not immune to falling victim, adding:

“To be the victim of an attack must be humiliating for the team which was once considered unbeatable. […] This attack went straight to the heart of one of the largest DeFi conglomerates, shaking the foundations of what was once considered an impenetrable fortress. ”

Rest assured!

Tether froze USDT 1.7 million that was stolen in the attack and could burn them, issuing more to pay off losses. This would then make it the same as a central bank, the blog said.

YFI’s response has been a little less constructive for those who have lost funds. The company said it is evaluating options to make the totalte Vault yDAI exploited by creating a Maker (CDP secured debt position) with YFI.

However, he said purchasing insurance from one of his partners would be a better option;

“In general, investing in YFI is at your own risk. If you want to protect yourself from exploiting external protocols in the future, consider taking out insurance for your deposits with Cover or Nexus mutual. „