No user funds were lost — but the error is a common one, an expert said.
A human error led the user of a decentralised finance protocol to receive $112,000 instead of $3.73 million.
Blockchain security firms flagged the failed transaction on Tuesday, which happened on YO Protocol when someone tried to swap Aave’s stkGHO stablecoin for Circle’s stablecoin USDC.
But YO’s harvesting system, the mechanism in DeFi which dishes out rewards, accidentally traded the vault’s entire stkGHO balance at a very poor price in a case of extreme slippage — when the price you get for a trade is drastically worse than what you expected.
How did it happen? Basically, slippage protection had not been adequately installed in the protocol to protect the user from the bad trade, according to YO Protocol.
In a statement published Wednesday, YO, which has $61.8 million locked in its project, according to DeFiLlama data, said that “slippage protections were insufficient, and the trade proceeded when it should have been blocked.”
DL News reached out to YO Protocol but did not immediately receive a response.
Speaking to DL News, Yehor Rudytsia, head of forensics at cybersecurity firm Hacken, said that such an error was common on yield protocols.
“The root cause of the incident is typical for yield farming protocols which do perform capital rotation or re-allocation,” he said.
No user funds were lost, and YO Protocol immediately fixed the error, the project added in its statement.
YO Protocol said that the user was using a system designed for claiming small rewards — so sufficient checks weren’t in place to make sure an error like this wouldn’t happen with such a big transaction.
“While automation is critical for scalability and efficiency, it must be supported by rigorous guardrails,” the protocol added in its statement.
“Additional safeguards have now been implemented to ensure the system operates safely, reliably, and in line with our standards,” YO added.
