The saga surrounding the recent market manipulation attack targeting dYdX, the leading decentralized perpetuals exchange, continues to unfold, with the dYdX team copping flak from decentralization devotees.
On Nov. 19, dYdX founder, Antonio Juliano, tweeted that the project will pay out bounties to sleuths helping to uncover the identity of the culprit behind an alleged Nov. 18 market manipulation attack.
The incident resulted in violent YFI liquidations and a $9M shortfall incurred by the dYdX protocol. However, the project mobilized assets from its insurance fund to cover losses and ensure no users were impacted.
Juliano added that dYdX has made “significant progress into identifying the attacker” and that the team is in the process of reporting the information to the U.S. Federal Bureau of Investigation (FBI). The insurance fund still holds $13.5M worth of assets after covering the recent shortfall.
The DYDX token is down 15% in the past 48 hours to last change hands for $3.26, according to CoinGecko. YFI is down 38% over the same period.
DYdX has attracted criticism for how it has handled the incident, with onlookers accusing the project of showcasing centralization in its response to the attack.
“DYdX has never really been decentralized, it runs like a [San Francisco-based] fintech startup,” tweeted Kain Warwick, the founder of Synthetix. “Decentralized tech is catching up and it is hard to pivot a culture of top-down hierarchical decision-making processes.”
“On dYdX, if you trade too profitably, the devs put a bounty on your head and report you to the FBI,” said Twitter user, Captain C2.
Juliano replied that there is “significant evidence” indicating the trader was engaged in market manipulation. “That is different than trading profitably as per laws in basically all jurisdictions,” he added.
The market manipulation drama served as a dampener on dYdX’s recent impressive rally.
As of Nov. 16, the DYDX token had rallied 60% in one week and more than 100% in 30 days following the project’s migration from a dedicated Ethereum Layer 2 to dYdX Chain — a Cosmos-based appchain.
The gains were fuelled by the introduction of a staking mechanism redistributing trading fees to DYDX stakers, driving up demand for the token.
- SEO Powered Content & PR Distribution. Get Amplified Today.
- PlatoData.Network Vertical Generative Ai. Empower Yourself. Access Here.
- PlatoAiStream. Web3 Intelligence. Knowledge Amplified. Access Here.
- PlatoESG. Carbon, CleanTech, Energy, Environment, Solar, Waste Management. Access Here.
- PlatoHealth. Biotech and Clinical Trials Intelligence. Access Here.
- Source: https://thedefiant.io/web3-community-slams-dydx-for-centralized-response-to-alleged-market-manipulation-attack
