Soft Yearn (SFYI) Rebase Exploit

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Soft Yearn

An exploit in the SFYI Rebase mechanism allowed a crypto trader to profit significantly.

The Soft Yearn team has committed to reimburse investors.

This is a global/international case not involving a specific country.

About Soft Yearn

"The token SYFI was launched as a soft-pegged adaptive cryptocurrency that expands or contracts its supply automatically. The concept was popularized by Ampleforth which uses a rebasing mechanism to adjust the supply to reflect changes in demand."

"Soft Yearn is an adaptive cryptocurrency that will expand or contract its supply automatically. As traders, we believe the market is always in the right, hence the market will decide SYFI's valuation."

"A soft pegged currency is tied to another currency. When a soft pegged currency has a significant difference from the main currency's price, the contract or expansion algorithm will converge the market price to the pegged price."

"Another rebase bug was exploited by a holder of Soft Yearn (SYFI) token on Sept. 3. The bug enabled a user to turn a $200 investment into $250,000." "An anonymous user has revealed how he made $250k in profits from a minor investment in a cloned version of Yearn.finance called Soft Yearn (SYFI)."

"During [thei]r first rebase at 8:00 UTC, September 3rd, 2020, a malicious actor bought 2 SYFI, and timed the adjustment of their token holdings with a Uniswap sell. During the transaction, the rebase applied, but Uniswap price remained unchanged, thus, the perpetrator's sell was amplified to the extent of wiping out most of the liquidity provided in the Uniswap pool. The rebase itself was also incorrect. The YFI rate per SYFI was not streamlined properly."

"Like YAM and Ampleforth, Soft Yearn dynamically changes its supply. However, the supply change didn’t translate to a Uniswap pool, where the token was traded." "The protocol did not properly handle the rebase event. It allowed a user to initiate a uniswap sell transaction just after the wallet balances were modified, but before any price change in the token was recorded. As with the bug that brought down Yam Finance, this critical oversight exemplifies the risk in using unaudited smart contracts and untested DeFi projects."

"To make matters even worse, the rebase itself acted incorrectly. The rate of YFI to SYFI was improperly coded, so an incorrect balance change was initiated. Together these two mistakes allowed for a transaction to be initiated which would essentially withdraw the collective funds contained within the pool."

"A user with 2 SYFI in their wallet spotted the bug before others. After the rebase, they had more than 15,000 tokens worth more than 700 ETH at the time. The user took advantage of the opportunity that appeared in front of them and wiped all the SYFI pool liquidity by dumping all their tokens for ETH."

"After the incident, the team published a rescue plan, which included relaunching SYFI tokens and adding 250 ETH to the Uniswap pool."

"Our statement and how we will tackle the recent events. We will continue to update our progress on Discord and Telegram."

"The Soft Yearn team is devastated by this event." "We are deeply sorry for what happened during the rebase period. We'll explain briefly what went wrong and how we intend to fix it. We **promise** you all this - we are NOT going anywhere."

"The Soft Yearn team has decided to pursue the following resolution: (1) Recreate the SYFI token. (2) Airdrop everyone the amount of tokens they had before the rebase. (3) Adding at least 250 ETH to the initial liquidity pool. Some people have contacted us stating that they will help contribute too. (4) Fix the rebase mechanism."

"We are offering a very large sum of ETH as bounty for anyone who can identify and apprehend the wrongdoer(s)."

"We understand everyone's frustration and anger, please bear with us while we work on sYFIV2 to fix things. Although this was a major setback, we believe we can come back stronger as we initiate our migration plan. Please follow our official announcement channels to stay up-to-date with our plans. Our official chats will remain muted temporarily."

"A DeFi trader using the Twitter handle Amplify has admitted that he was the one who netted 740 ETH from an initial investment of just 0.5 ETH. This works out at roughly a $250,000 return for a $200 layout."

"The DeFi user has a minimum wage job and works from home to support his family. He also has a small trading account to work from. Having experimented with a number of different trading techniques the user said that he regularly ‘apes’ into fresh Uniswap listings after confirming project’s credibility."

"I did not have any intent to hurt anyone. I did not want the SYFI team to fail. There was never any malicious intent here. I saw an opportunity, or trade if you will, and I took it."

"The Soft Yearn project has lost most of whatever reputation it had and liquidity and volumes have completely dissipated according to Uniswap analytics. It claims to be working on SYFI v2 which will provide a fix for the unaudited code, but it may be too little too late."

This is a global/international case not involving a specific country.

The background of the exchange platform, service, or individuals involved, as it would have been seen or understood at the time of the events.

Include:

• Known history of when and how the service was started.
• What problems does the company or service claim to solve?
• What marketing materials were used by the firm or business?
• Audits performed, and excerpts that may have been included.
• Business registration documents shown (fake or legitimate).
• How were people recruited to participate?
• Public warnings and announcements prior to the event.

Don't Include:

• Any wording which directly states or implies that the business is/was illegitimate, or that a vulnerability existed.
• Anything that wasn't reasonably knowable at the time of the event.

There could be more than one section here. If the same platform is involved with multiple incidents, then it can be linked to a main article page.

The Reality

This sections is included if a case involved deception or information that was unknown at the time. Examples include:

• When the service was actually started (if different than the "official story").
• Who actually ran a service and their own personal history.
• How the service was structured behind the scenes. (For example, there was no "trading bot".)
• Details of what audits reported and how vulnerabilities were missed during auditing.

What Happened

The specific events of the loss and how it came about. What actually happened to cause the loss and some of the events leading up to it.

Key Event Timeline - Soft Yearn (SFYI) Rebase Exploit

Date	Event	Description
September 3rd, 2020	Main Event	Expand this into a brief description of what happened and the impact. If multiple lines are necessary, add them here.

Technical Details

This section includes specific detailed technical analysis of any security breaches which happened. What specific software vulnerabilities contributed to the problem and how were they exploited?

Total Amount Lost

The total amount lost has been estimated at $250,000 USD.

How much was lost and how was it calculated? If there are conflicting reports, which are accurate and where does the discrepancy lie?

Immediate Reactions

How did the various parties involved (firm, platform, management, and/or affected individual(s)) deal with the events? Were services shut down? Were announcements made? Were groups formed?

Ultimate Outcome

What was the end result? Was any investigation done? Were any individuals prosecuted? Was there a lawsuit? Was any tracing done?

Total Amount Recovered

There do not appear to have been any funds recovered in this case.

What funds were recovered? What funds were reimbursed for those affected users?

Ongoing Developments

What parts of this case are still remaining to be concluded?

General Prevention Policies

This situation appears to have affected directly the price of the Soft Yearn token, rather than any other assets.

Individual Prevention Policies

No specific policies for individual prevention have yet been identified in this case.

For the full list of how to protect your funds as an individual, check our Prevention Policies for Individuals guide.

Platform Prevention Policies

Policies for platforms to take to prevent this situation have not yet been selected in this case.

For the full list of how to protect your funds as a financial service, check our Prevention Policies for Platforms guide.

Regulatory Prevention Policies

No specific regulatory policies have yet been identified in this case.

For the full list of regulatory policies that can prevent loss, check our Prevention Policies for Regulators guide.