Yearn asks for money back after it accidentally loses part of its treasury

The incident happened after a “faulty multisig script” swapped Yearn’s entire treasury balance

article-image

Andre Cronje/Shutterstock modified by Blockworks

share

Updated Dec. 13, 2023 at 1:33 pm ET: Modified headline and context following Yearn clarification.

Thanks to a script error, Yearn lost part of its treasury.

While it initially posted that it lost 63% of the treasury, it corrected its GitHub post to say that it lost “63% of the LP value.” The clarification was made Wednesday after Blockworks published the initial figures.

“When factoring in the 779,958 yvDAI tokens received from this trade, the total loss experienced by Yearn’s treasury comes out to about 63%,” the post said initially.

This loss occurred when a malfunction in a multisig (multi-signature) script led to the unintended swap of Yearn’s treasury balance.

The company clarified that the funds were strictly from Yearn’s treasury, and not from any customer funds.

According to a post, a “faulty multisig script caused Yearn’s entire treasury balance of 3,794,894 lp-yCRVv2 tokens to be swapped.” The incident happened on Dec. 11. 

“This amount comprised a large portion of the Curve pool, and therefore incurred significant slippage which arbed back to the normal price by the market shortly after,” Yearn wrote.

“When factoring in the 779,958 yvDAI tokens received from this trade, the total loss experienced by Yearn’s treasury comes out to about 63%.”

The DeFi protocol is also asking “anyone who profitably arbed this mistake to return an amount that they feel is reasonable to Yearn’s main multisig ychad.eth.”

The post explained that multiple oversights led to the faulty transfer. The entire treasury balance, including fees, was transferred to the trading multisig, which sent the transaction to CoW Swap for 30 or so orders — including the one to swap the balance. 

Read more: Sorella and CoW Protocol have something in common: Making on-chain exchanges work better

The post said that the high volume of trades involved in this single transaction significantly complicated the process of human review, leading to the oversight not being caught in time.

“The script used by the trading multisig to swap tokens lacked sufficient output checks and contained a logical error that would have capped the trade size to a reasonable amount,” Yearn wrote.

The protocol put new checks in place to prevent the same error from happening again. These include segregating protocol-owned liquidity (POL) funds into separate entities, enhancing trading scripts with more human-readable output messages, and imposing “stricter price impact thresholds” during trades.

Earlier this year, Yearn was targeted in an attack. The attacker was able to make off with roughly $11 million in stablecoins. 

The attack happened when a vulnerability in a Yearn vault was exploited, allowing the attacker to access tether (USDT) deposits.

Using 10,000 USDT, the attacker then minted 1.2 quadrillion yUSDT — the Yearn-equivalent token — and swapped them for stablecoins using Curve Finance to bag $11.6 million.


Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.

Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. Subscribe to the Forward Guidance newsletter.

Get alpha directly in your inbox with the 0xResearch newsletter — market highlights, charts, degen trade ideas, governance updates, and more.

The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.

Tags

Upcoming Events

Javits Center North | 445 11th Ave

Tues - Thurs, March 18 - 20, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

Research Report Templates (1).jpg

Research

With $13B in tokenized assets, strong institutional partnerships, and a clear first-mover advantage in the RWA space. The platform's methodical approach to regulatory compliance, coupled with its hybrid public-private architecture, positions it uniquely to capture significant market share in the emerging tokenization landscape. While current fee generation primarily stems from metadata transactions, the planned launch of Figure Markets, major exchange listings, and comprehensive market-making initiatives in 2025 could serve as powerful catalysts for growth.

article-image

Perena is built on the premise that as stablecoins proliferate, liquidity could fragment, and stablecoins aren’t useful if they aren’t liquid

article-image

From hackathons to trading tools and DAO governance, AI agents are redefining how we build and innovate

article-image

CME’s large bitcoin contracts are so big that investors are turning to micro bitcoin contracts

article-image

The third-largest stablecoin is going multichain for the first time in its seven-year history

article-image

Nano Labs’ news release notes confidence in bitcoin being “a reliable store of value amidst its rising global adoption”

article-image

Several big companies report third quarter earnings this week, likely moving markets