Yam Finance developers found a major bug in its smart contract today. (Image: Unsplash)
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In brief
Developers of the DeFi token Yam uncovered a major flaw in its protocol earlier today.
The flaw results in extra tokens being minted at the time of rebasing.
Despite a proposal to lock up 160,000 YAM in a smart contract to save the network, it was discovered that the smart contract would still not work as intended.
Yam Finance, a decentralized finance (DeFiDeFi) governance experiment that locked up $400 million in capital this week, uncovered flaws in its underlying protocol earlier today. Its developers asked users to “exit” certain pools immediately.
The two-day-old project mashes together rebasing—reducing/increasing token supply to ensure that network value remains stable—with the current trend for yield farming, or locking up capital in a smart contract for other traders to borrow in return for attractive capital rates (10,000% per annum in Yam’s case).
Yam, mashed
However, ahead of its rebasing later today, developers found out the smart contract code was flawed and would have “minted too much reserve” instead of rebalancing supply.
There’s a bug in the Yam Finance protocol, the day-old yield farming mash-up project delivering the latest astronomical annualized returns in the booming DeFi industry.
Yam Finance tweeted the discovery earlier today, alerting users to an error leading to unintended token supply growth that would benefit the governance-controlled reserve. The extra tokens accumulated would capture an increasing amount of the overall Yam market cap, reducing the value of all other user’s tokens over time.
We hav...
It was no problemo at 0600 UTC today. A Yam proposal called for locking up 160,000 YAM in a smart contract to save the network, one that would have rewarded farmers and benefactors with more digital sweet potatoes if the target was met; which it was.
Thank you for your support. Help us hit our stretch goal for added safety.
It's not over yet. The proposal will be submitted sometime after 7am UTC and before 8am UTC.
The team added in a follow-up tweet, “the concern is the same as before: the yCRV (a collateral token) accumulated in the reserves during rebase is at risk of being stuck if governance cannot pass proposals.”
The project’s pseudonymous developer, “Belmore,” expressed his apologies for the situation in a tweet, stating he was “sick with grief.”
i’m sorry everyone. i’ve failed. thank you for the insane support today. i’m sick with grief
A user has transferred 30,000 Wrapped Ethereum (WETH), worth roughly $11,4 million, in a single transaction to the experimental—and unaudited—decentralized finance (DeFi) protocol Yam today, according to analytics platform Nansen.
This morning, someone dunked 30,000 WETH (~$11M) into YAM in 1 single transaction: https://t.co/5qpF8BRRgK pic.twitter.com/7V8hanXRXk
— Alex Svanevik 🧭 (@ASvanevik) August 12, 2020
Yam is an experimental DeFi yield farming protocol that is “mashing up some of the mo...
“We live and learn. YAM is a powerful, beneficial experiment no matter the outcome,” said Hudson Jameson, an Ethereum Foundation developer.
The project is still in limbo for now. The worst-case scenario is that YAM tokens, currently valued at $12 apiece, would end up being worthless.
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