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Jackpot! A user turns $200 into $250K thanks to a buggy DeFi protocol.

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INDIA

Sep, 22 2020

Sep, 22 2020

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An anonymous user managed to net a $250k from a $200 outlay due to a flaw in a DeFi protocol clone’s rebase code.

 An anonymous user has revealed how he made $250k in profits from a minor investment. The investment was in a cloned version of Yearn.finance called Soft Yearn (SYFI). The token SYFI was launched as a soft-pegged adaptive cryptocurrency. It expands or contracts its supply automatically. Ampleforth popularized the concept. This uses a rebasing mechanism to adjust the supply to reflect changes in demand. But, the Uniswap price of the cloned token was not adjusted to account for the rebase. He managed to sell the tokens at the previous price. It wiped out virtually all of the liquidity in the pool. A flaw in the SYFI-rebasing mechanism allowed the anonymous user to get a large number of tokens. This happened during its first rebase on September 3. 

 

A DeFi trader has admitted that he was the one who netted 740 ETH from an initial investment of just 0.5 ETH(Ethereum). This works out at roughly a $250,000 return for a $200 layout. The DeFi user has a minimum wage job. He works from home to support his family. He also has a small trading account to work from. He has experimented with several different trading techniques that includes digital currency. The user said that he regularly ‘apes’ into new Uniswap listings. This was after confirming the project’s credibility. Following the FOMO surrounding SYFI, he did just before the rebase with 2 SYFI bought for $100 each. 

 

The anonymous user said he did not go out to exploit this code intentionally. He was not looking to hack into the smart contracts. He admitted that the extraordinary profit was an accident; The SYFI token surged in price initially. This is what a lot of DeFi food tokens have done recently. But within a day, they had collapsed to virtually nothing like the bug in the protocol was exploited. There was another bug in the code. This also affected the rebase pricing mechanism. The Soft Yearn project has lost most of whatever reputation it had. Liquidity and volumes have wholly dissipated, according to Uniswap analytics. It claims to be working on SYFI v2, which will fix the unaudited code, but it may be too little too late.

 

DeFi services have been getting traction recently. Some of the largest banks in South Korea decided to provide FX rate information to DeFi services.


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