DeFi Protocol Yearn Finance Impacted in Nearly $11M Exploit That Occurred Via Aave Version 1

The exploiter was able to steal millions of U.S. dollar-pegged stablecoins, data shows.

AccessTimeIconApr 13, 2023 at 6:50 a.m. UTC
Updated May 9, 2023 at 4:12 a.m. UTC

A bug in a token issued by decentralized finance (DeFi) protocol Yearn Finance was impacted in an exploit this morning, security firm PeckShield tweeted, leading to millions of dollars in losses.

Losses could total over $11 million and occurred on Aave version 1, the data suggested. These were spread over U.S. dollar-pegged stablecoins dai (DAI), tether (USDT), USD coin (USDC), Binance USD (BUSD) and tru USD (TUSD).

  • Over $67M in Crypto Lost to Hacks and Exploits in February: Immunefi Report
    00:56
    Over $67M in Crypto Lost to Hacks and Exploits in February: Immunefi Report
  • Running With Crypto: 5 Questions With TRM Labs' Ari Redbord
    00:59
    Running With Crypto: 5 Questions With TRM Labs' Ari Redbord
  • Hacks Involving North Korea Are 'Even Greater Problem': Legal Experts
    09:43
    Hacks Involving North Korea Are 'Even Greater Problem': Legal Experts
  • Breaking Down the State of Hacking in 2024
    02:01
    Breaking Down the State of Hacking in 2024
  • Aave version (v)1 was previously thought to be affected by the exploit. However, Aave developers said the protocol was unaffected and merely used to swap tokens to conduct the exploit, which mainly involved Yearn Finance's yUSD stablecoin.

    "We need to clarify that the root cause is due to misconfigured yUSDT, not related to Aave," PeckShield said in a follow-up tweet following the initial flag.

    PeckShield said exploiters were able to mint over 1.2 quadrillion yUSDT in early Asian hours using a $10,000 initial deposit, which was then used to trick the Yearn Finance protocol to eventually cash out millions in stablecoins.

    Elsewhere, Marc Zeller, founder at Aave-Chan initiative and former Aave integration lead, said in a tweet that the impact to the protocol was limited as version 1 was "frozen since December 2022."

    "The current size of v1 is $18 [million], and the current size of the Aave safety module is $382.50M," Zeller said, adding in a separate tweet that version 2 and version 3 of Aave were not impacted at writing time.

    UPDATE (April 13, 07:53 UTC): Clarifies Aave was not directly impacted and that Yearn Finance's yUSD caused the exploit instead.

    UPDATE: (April 13, 15:40 UTC): Updates Marc Zeller's tittle.

    Disclosure

    Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

    CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.

    Shaurya Malwa

    Shaurya is the Deputy Managing Editor for the Data & Tokens team, focusing on decentralized finance, markets, on-chain data, and governance across all major and minor blockchains.