trader who made $ 250,000 with a failed DeFi

As the fever for decentralized finance platforms (DeFi) grows, more flaws appear that cause the loss of funds of their users. One of the most recent cases was the failure of DeFi Soft Yearn Finance (SFYI), a project that emerged after the price boom of Yearn Finance (FYI).

Through Twitter, the user @A_mplify assured be responsible for the loss of almost all the liquidity available in the SFYI contract, on September 3. This happened by an SFYI contract bug that ended up awarding you more than 740 ETH (Ethereum’s native cryptocurrency, the platform on which this DeFi scheme runs).

In addition, he did it without being aware of what was happening, he claimed in his publications. “If I can clarify one thing, I have less idea of ​​what I did than you,” he wrote on the social network.

According to his posts, @A_mplify simply took an opportunity that presented him with the same interface user name of the DeFi Uniswap platform, where SFYI is listed.

In his account, the trader He assured that that day he bought the equivalent of 0.5 ETH in SFYI through Uniswap. He then sold them after tripling his investment and, shortly before the day’s “overshoot” moment, he invested 0.5 ETH again in the token.

Then he found that the platform reflected in its wallet more than 15,000 tokens equivalent to 747 ETH (about $ 250,000 at the time of writing). Although you thought it was an error and that sending that transaction would fail, it did not.

“This is a UI bug, it will prompt me to submit a transaction that I know will fail due to insufficient amount of output,” @A_mplify related. But the error in the contract effectively granted him the funds, eliminating much of the liquidity in the platform and affecting those who had invested in SYFI.

He had no intention of hurting anyone. I didn’t want the $ SYFI team to fail. There were never any malicious intentions here. I saw an opportunity, or an exchange if you will, and I took it.

@A_mplify

Redistribution of liquidity to maintain the price over YFI

The failure, specifically, occurred in the “overrun” system than modifies the working capital of token based on keeping its value stable with respect to YFI, according to the team behind the project. The intention is that SFYI equals 0.0003 YFI all the time.

Defi-token-ethereum
Soft Yearn Finance logo, a DeFi project with a token that seeks to maintain parity with the YFI token. Source: Syfi Finance / syfi.finance

Depending on the price fluctuation, the system burns tokens in the event that the price is falling or inflates the supply in the opposite case; decreasing or increasing the balance in SYFI’s holding portfolios. Something that could be seen as dangerous and indicate that SYFI holders do not own their private keys. This process occurs every 24 hours, depending on expose the creators of the project.

The user claims that this would inevitably happen. In his opinion, if it had not been your transaction “With 500 gwei (processing fee), someone else would have (and probably did) with 490 gwei.”

On September 4, the day after what happened, the team behind this DeFi project made their position public. Via Twitter, they posted a brief statement stating that they would recreate the SYFI token, they would redistribute the amounts that the wallets had before the error and would add a total of 250 ETH to liquidity. Finally, they stated, they would correct the error in the overrun system that allowed the loss of funds.

In its statement, Soft Yearn asked for support in identifying the person responsible. To do this, they offered a reward for a “large sum of ETH”, although they do not specify the amount. Following the statements of the person in charge, the creators of the platform have not issued any new statement. This, despite the fact that @A_mplify alleges that the flaw was generated by Soft Yearn’s own error and not an intentional action on their part.

Failures and lost funds in DeFi

Since the Yearn Finance (YFI) token surpassed the price of Bitcoin a couple of weeks ago, given its low supply of 30,000 units, the fever of DeFi platforms grew even more in a popularity that had already been gaining ground this year.

After that rise, various versions have come out that imitate the token and the protocol of this platform, as we review recently on CryptoNews. This, in the eyes of the trader, it’s a mistake and a bad action on the part of the creators of these tokens.

“I am condemning the actions of the developers to have the balls to ask for a pre-sale for a forked coin and to launch it with an unaudited code,” wrote @A_mplify on Twitter. In addition, she questioned whether it seeks to “imitate” the price of YFI in this way with a token that does not cover with minimum security aspects.

transacción-uniswap-SyFitransacción-uniswap-SyFi
Transaction by user @A_mplify where he earned more than 740 ETH. Source: Etherscan.

This error is not an isolated case. The proliferation of projects like this has been such that system failures have become common. A clear example of which we inform in this medium A little less than a month ago it was YAM, which was affected by a bug in the code and blocked about $ 750,000 in tokens under its contract.

“I will not go so far as to argue that the $ SYFI token was created with this bug in mind with the specific intention of misleading the community,” said @A_mplify, who added that SYFI has faulty code and may result in a misleading offer. .

The user who capitalized on the bug stated that you plan to donate $ 10,000 of what you obtained, who were ‘readily available and eager to get lost’, to some cause that is available to be funded on Gitcoin. “Suggestions are received,” he said about it.

Finally, he invited the public not to get carried away by such risky projects with few guarantees. “I hope we can investigate and invest in safer things next time,” she concluded after her story.

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