Yearn Finance (YFI), a leading yield-farming protocol, reported a significant loss to its treasury due to a faulty multisig script.
The event, which occurred during a regular fee token conversion, caused a position in the treasury to decrease by 63%. However, it is important to note that no user funds were affected by this incident.
The faulty script led to an unintended transfer of 3,794,894 lp-yCRVv2 altcoins, which were exchanged for 779,958 yvDAI altcoins.
The script used by the cryptocurrency multisig wallet to exchange tokens for trades did not have adequate output controls and contained a logical error that could not limit the transaction size to a reasonable amount. This error led to a significant price fluctuation that was quickly corrected by the market.
In an interesting development, Yearn Finance is also appealing to its users who may have profited from the price movement caused by the event. The protocol team is asking these users to return what they think is a reasonable amount to Yearn's main multisig.
Total losses before returned funds amount to $1.4 million, which is approximately 2% of the entire treasury.
*This is not investment advice.