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The team behind Yam Finance battled a malicious governance attack and protected its treasury worth millions.
A starlet of the DeFi summer back in 2020, Yam Finance attracted over $400 million in funds from yield farmers on its first day. The project eventually collapsed, however, after a bug in its unaudited smart contract inflated the number of YAM tokens by 10x, rendering any governance decisions impossible.
The project now lives on in a newer form after receiving $115,000 in donations to execute a security audit.
The latest governance attack has now put the project back in the spotlight.
“Earlier today, there was a governance attack on the DAO that has been thwarted,” tweeted Yam Finance on July 9.
According to a report published by the team, the attacker issued a malicious governance proposal with a spam description with the intent to gain control of the project's treasury.
“Contributors comps for May, backpay for VDM, settling synths tokens and success tokens, sending settled rewards tokens to reserves, sending and withdrawing test Uma and claiming sushi for reserves,” read the garbled description, per Etherscan.
Shortly after the proposal was created, the attacker then voted on the proposal using 224,739 YAM tokens (a sum sufficient to reach a quorum).
YAM, the native token of Yam Finance, currently token trades at $0.11 down 2.5% over the past 24 hours, according to data from CoinMarketCap.
Before execution, however, the team was able to cancel the proposal through their privileges, blocking the malicious attack. The proposal was canceled three hours after it was created.
If executed, the exploiter would have been made the admin (or controller) of the funds held by YAM Finance treasury, worth approximately $3.1 million per data from DeepDAO.
Yam Finance Governance wars
It’s been a curious few days for the project after its community recently passed another rather interesting proposal.
Following the token’s tremendous slide, last week the YAM community voted on another proposal dubbed “Redemption Proposal” that would've allowed YAM token holders to redeem their tokens for approximately $0.25 from the treasury.
On July 8, the proposal was passed with nearly 54.14% of voters supporting the proposal.
Today, though, the team behind Yam Finance suggested a re-vote on the proposal to allow more time to discuss. The team also said that they do not agree with it.
“As some of you may have noticed, there was a snapshot vote recently that proposes to make the treasury redeemable at a pro-rata rate,” tweeted Yam Finance. “So given the magnitude of a vote like this, combined with lack of communication and transparency, we propose a re-vote on this proposal with ample time to discuss.”