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Unveiling the $9M dYdX Market Manipulation

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on November 18, 2023, approximately $9 million from the dYdX v3 insurance fund was utilized to cover losses incurred during liquidations in the YFI market. CEO statements suggest a deliberate and targeted market manipulation attack against dYdX.

How the Hacker Profited from dYdX

X-explore and WuBlockchain investigation with a detailed examination of the hacker’s activities on dYdX, focusing on the address 0x779c313c968aA36fb696DAcca674Dc757c8BB4C2

Depositing for Profit: On November 7, 2023, the hacker initiates the process by depositing 35,000 USDC into dYdX at 23:35:23.

2. Strategic Contract Opening: At 00:39:11 on November 9, 2023, the hacker strategically opens a YFI-USDC contract, acquiring 49.67 YFI at a price of 6,199U, with a total cost of 302,865U and a leverage of 8.6X.

3. Profit Extraction: Between November 11 and November 17, the hacker makes six withdrawals of unrealized profits, totaling 271,602 USDC. The cumulative profit at this point stands at an impressive 236,602 USDC.

4. Market Downturn and Forced Liquidation: The climax occurs on November 18, 2023, at 10:40:47, when the hacker faces a significant market downturn. The YFI and USDC balances hit zero, and the dYdX insurance fund suffers substantial losses due to forced liquidation.

With a network of 129 addresses, the hacker’s total profit can be meticulously calculated by summing the inflow and outflow between these addresses and the dYdX fund address. The comprehensive analysis reveals a staggering $12.75 million in earnings, with $5.55 million stemming from YFI and the remainder from Sushi.

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