Yearn Finance Restores Dai Vault, Compensates Hack Victims

Yearn Finance, the yield aggregator protocol, has made progress in its recovery from a hack that occurred last week, implementing several measures to restore services and compensate victims. The yDAI vault has been reopened, with $9.7 million in DAI funds returned to users. To cover the debt incurred, Yearn minted DAI using YFI as collateral and intends to repay it through protocol-generated fees. Meanwhile, insurance claims related to the hack are being processed, with 12 out of 16 accepted for payouts totaling ~$2.1 million.

Yearn Finance Restores Dai Vault, Compensates Victims of Hack

Following a significant hack that occurred last week, Yearn Finance, a leading yield aggregator protocol, has taken significant steps towards recovery. The protocol has restored its Dai savings smart contract, enabling users to regain access to their funds, and has initiated compensation efforts for victims of the attack.

Restoration of yDAI Vault

Yearn has successfully reinstated its yDAI vault, allowing users who had deposited their stablecoins into the vault prior to the attack to recover their funds. The protocol has allocated $9.7 million in DAI to the vault, using its native YFI token as collateral through a MakerDAO vault.

The protocol plans to repay this debt through fees generated by the protocol's operations. However, Yearn has emphasized that the restoration of the vault is a "one-off celebration" and strongly encouraged users to consider purchasing insurance provided by Cover Protocol.

Insurance Claims Settlement

Since the February 4th hack, 16 insurance claims have been filed through insurance protocol Nexus Mutual. Of these claims, 12 have been approved for payouts totaling approximately $2.1 million, while three claims worth $223,000 remain pending approval. It is anticipated that these pending claims will also be approved.

According to DeFi Dad, a contributor to The Defiant, the single rejected claim was likely due to the claimant not having lost at least 20% of the coverage amount in the hack. This is a requirement for Nexus Mutual coverage to be eligible for payout.

Token and TVL Stability

In the wake of the hack, the value of Yearn's YFI token has rebounded by as much as 24% and is currently trading near its pre-attack levels at $35,000. The token's recent 7.2% spike in value is attributed to the confidence inspired by the team's commitment to restoring user funds.

Despite the hack, the total value locked (TVL) in Yearn has remained relatively stable over the week, with a fluctuation of less than a percentage point, according to DeBank. This stability indicates that users have maintained their faith in the protocol's long-term viability.

Yearn Finance's response to the hack has been met with mixed reactions. While some have praised the team's swift actions to restore the vault and compensate victims, others have expressed concerns about the protocol's security measures and the potential for future attacks.

The incident has highlighted the importance of robust security practices and the need for users to exercise due diligence when interacting with DeFi protocols. Yearn has acknowledged the necessity of enhanced security measures and has stated that it is actively working on strengthening its systems to prevent similar incidents in the future.