$750 000 USD

AUGUST 2020

GLOBAL

YAM FINANCE

DESCRIPTION OF EVENTS

"YAM is a modified clone of Ampleforth, a stablecoin with dynamic supply. Depending on the demand, YAM and Ampleforth can increase or decrease the total supply to maintain the $1 peg. Supply is changed by calling a dedicated “rebase” function." "Community-led DeFi stablecoin YAM managed to attract hundreds of millions of dollars in a matter of hours after it launched on Aug. 11." "YAM’s key difference from Ampleforth is that it automatically bought yCRV tokens whenever supply increased."

 

"At 08:01 AM UTC, Aug-13-2020, the creator of YAM, @brockjelmore, tweeted about the failure of rescuing the $750,000 yCRV tokens locked in the governance contract." "[A] single line of code doomed the Yam farmers", "creat[ing] “Zimbabwe style” inflation." "[A] bug in the rebase function meant that each call after the first one would “exponentially increase [supply] every time by 10^1e18.”" "The team wanted to use YAM in the project’s governance, but the rebase function issued excess YAM tokens to the project’s treasury, which diluted YAM holders’ governance power." "The price plummeted by 99% within 24 hours, resulting in the “permanent destruction” of the governance contract. Curve tokens worth 750,000 USD It is locked and cannot be used."

 

"The team tried to fix the bug by initiating a voting process to stop rebasing until the project’s governance contract is swapped. However, the initiative failed despite high voter turnout." "By the time the team realized nothing could be done to save the project, $750,000 of yCRV were already locked in the treasury." "The team didn’t give up and eventually swapped the project’s governance module to a working one. YAM holders could migrate via a temporary smart contract."

 

"Yam Finance all but collapsed ... following the discovery of [the] fatal error, but the project has since gained $200 million in total value locked." "Yam is still the 7th largest Defi project according to total value locked (TVL)." "The project library suffered a serious loss of as much as 750,000 US dollars of Curve tokens." "[P]rice plummeted 99%." "After the bug announcement, the YAM token’s value dropped significantly as the token touched an all-time high of $167.66 per token. At the time of publication, the token is only worth $0.97 per YAM."

 

"[B]lockchain security company Peckshield [conducted] an audit of the migration contract." “Following the audit, we will publish the report, deploy the migration contract, and enable migration through [the website],” the blog stated. Users will then need to burn their V1 tokens and mint new V2 tokens within 72 hours of the migration deployment. "[T]he Yam Finance team announced that the new [V3] protocol's migration would start at 8 PM UTC on Friday, September 18." "V3 ha[s] successfully passed the audit performed by PeckShield." "Following the migration, YAMv2 emerged. The token managed to climb to $32 but failed to repeat the previous success and returned to $25.7 by the time of writing." "[T]here is a lot of work that can be done to improve Yam. Despite the last month of progress, the relaunch of Yam is truly a starting point."

Despite an audit, YAM Finance launched with a coding error which caused governance tokens to be minted rapidly in the protocol. This doomed the project, and ended up with $750,000 worth of yCRV token stuck in the contract.

 

The project was relaunched in a new smart contract, and the second version was more successful.

HOW COULD THIS HAVE BEEN PREVENTED?

The safest storage of assets is an offline multi-signature wallet. Storing funds in a smart contract is very similar to a hot wallet and should be avoided.

 

Check Our Framework For Safe Secure Exchange Platforms

Yam Suffers Technical Outage Following Scam Accusations  (Aug 11)
Defi Project Yam Finance Sees Over $500M Locked in 24 Hours, Devs Reveal Contract Bug | Bitcoin News (Aug 11)
How One Line of Code Destroyed Yam DeFi (Aug 12)
Rebase Bug Permanently Breaks Yam Governance (Aug 12)
The impact of the Yam project’s lightning incident (Aug 12)
Defi Implosion: YAM Token Market Cap Plummets to Near Zero as Founder Claims He 'Failed' | Bitcoin News (Aug 12)
@YamFinance - Twitter (Aug 13)
Meteoric Rise And Fall Of YAM Explained - Ethereum, DEFI - YouTube (Aug 13)
DeFi strikes again: YAM protocol bug leads to $750,000 loss - CoinGeek (Aug 13)
@YamFinance - Twitter (Aug 15)
Ethereum Transaction Hash (Txhash) Details | Etherscan  (Aug 17)
@YamFinance - Twitter (Aug 18)
Investors Tip $400M Into Failed DeFi ‘Yam’ Project Hoping for a Sequel (Aug 18)
yam-migration/PeckShield-Audit-Report-YAMv2-v1.0.pdf at master · yam-finance/yam-migration · GitHub (Aug 18)
@YamFinance - Twitter (Aug 21)
@YamFinance - Twitter (Sep 17)
Yam Finance announces migration to V3 in hopes to revive the project  (Sep 17)
@YamFinance - Twitter (Sep 19)
@YamFinance - Twitter (Sep 19)
@YamFinance - Twitter (Sep 19)
Yam Finance Replants and Rebases But Tokens Still Slide (Sep 21)
"It Was Exciting But it Was Also Terrifying:" Dan Elitzer and Clinton Bembry on Yam Finance's Backstory by The Defiant • A podcast on Anchor (Sep 25)
YAM Finance (Jul 10)
Chengdu Lianan: In August, there were 5 security incidents in the DeFi field, and a total of 39 incidents in the blockchain field • Blockcast.cc- News on Blockchain, DLT, Cryptocurrency (Jun 12)
Millions Lost: The Top 19 DeFi Cryptocurrency Hacks of 2020 | Crypto Briefing (May 21)
No Audits, No Problem: DeFi Stablecoin YAM Attracts Over $100 Million | Crypto Briefing (Jun 26)
What Is Ampleforth? How AMPL Is Redefining Decentralized Money | Crypto Briefing (Jun 26)
The Yam Finance DeFi Experiment Comes to a Grinding Halt | Crypto Briefing (Jun 26)
@YamFinance Twitter (Jul 10)
@YamFinance Twitter (Jul 10)
@YamFinance Twitter (Jul 10)
@YamFinance Twitter (Jul 10)
@YamFinance Twitter (Jul 10)
@YamFinance Twitter (Jul 10)
@YamFinance Twitter (Jul 10)
@YamFinance Twitter (Jul 10)
@YamFinance Twitter (Jul 10)
@YamFinance Twitter (Jul 10)
@YamFinance Twitter (Jul 10)
@YamFinance Twitter (Jul 10)
@YamFinance Twitter (Jul 10)
@YamFinance Twitter (Jul 10)
@YamFinance Twitter (Jul 10)
@YamFinance Twitter (Jul 10)
@YamFinance Twitter (Jul 10)
@YamFinance Twitter (Jul 10)
@YamFinance Twitter (Jul 10)
@YamFinance Twitter (Jul 10)
@YamFinance Twitter (Jul 10)
@YamFinance Twitter (Jul 10)
@YamFinance Twitter (Jul 10)
@YamFinance Twitter (Jul 10)
Save Yam (Jul 10)
Yam Post Rescue Attempt Update (Jul 10)
Yam Migration Faq (Jul 10)
Yam Migration Live (Jul 10)
SlowMist Hacked - SlowMist Zone (May 17)
Blockchain Hacks: 2020 | $15 billion lost, how can we mitigate hacks in 2021? | CertiK Foundation Blog (Jul 22)
https://mobile.twitter.com/certik_io/status/1293999091245035521 (Jan 10)
@amanusk_ Twitter (Jul 24)

Sources And Further Reading

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