How to turn $200 into $250k trading buggy DeFi tokens

wizard from space -

One DeFi token trader seems to have hit his lucky day where all the stars aligned. The anonymous trader took to twitter to reveal how he made $250k in profit by making a minor investment into a fork of Yearn Finance called Soft Yearn (SYFI) token.

What in god’s name is SYFI token?

Soft Yearn was launched as an adaptive cryptocurrency asset, meaning it automatically adjusts its supply to keep the value softly pegged. A concept made popular by the Ampleforth token’s rebasing mechanism. A bug in the SYFI-rebasing mechanism meant that the Uniswap price of the token never adjusted to account for the rebase.

Hitting the jackpot… Which meant that once the first rebase happened, the trader was able to sell his tokens at the previous price. This wiped out all of the pool’s liquidity in one trade, netting the trader 740 ETH from an initial investment of just 0.5 ETH.

  • The anonymous trader known as Amplify on Twitter has stated he did not intentionally exploit the code. His trading strategy revolves around buying into fresh Uniswap listings with Ethereum, and this was just a lucky pick.

The end for Soft Yearn… Much like other recent DeFi clones, SYFI token’s initial price started by going up rapidly. It then faced a sudden drop and once the users became aware of the bug, it collapsed completely. The team is working on v2 to fix the problem, but it looks like their reputation is already in tatters.