On Sep 4, the token price of Soft Yearn Finance (SYFI) came crashing down from $99.02 to $0.00259104 within one hour. Just like YAM, the SYFI protocol fell victim to the rebase bug. However, the bug in the rebase code proved to be fatal for SYFI. An anonymous user who had laid out only $200 made off $250k from the liquidity pool and led to the collapse of SYFI.
As a Yearn.Finance (YFI) clone, Soft Yearn (SYFI) is a token with adaptive properties. That means the supply of SYFI will expand or contract automatically driven by the market demand. This token supply adjustment is known as rebasing, which happens after every 24 hours for SYFI. The project was expected to ride the YFI wave but the rebase bug proved to be disastrous.
The rebase disaster
On Sep 3 at 8:00 UTC, SYFI underwent its first rebase. Minutes before the rebase, an anonymous user, who goes by twitter account @A_mplify, bought two SYFI for $100 each. According to the SYFI official statement, the user timed his Uniswap sell with the supply adjustment. This invoked the rebase bug, and the user wiped out nearly the entire liquidity of the project.
In the SYFI rebase code, the YFI rate per SYFI was not streamlined the right way. Thus, at the time of sell, the Uniswap price did not change immediately and the user’s sell was amplified.
User’s version of the story
According to @A_mplify, he bought two SYFI two minutes before the rebase. As soon as the rebase happened, suddenly his SYFI balance switched to 15,551. What he thought was a UI bug proved to be a rebase bug and he received 740 ETH for his sell.
1/ Take it as you will:
I am the person who sold $SYFI on uniswap at the same time as the Rebase.
Or, I am the person who exploited the rebase bug in $SYFI.
Or, I am the malicious actor who pulled the rug on innocent chads.
— Amplify (@A_mplify) September 7, 2020
In his tweets, he clarifies that never intended to exploit the bug as he never knew the rebase code had a flaw.
How does SYFI intend to fix the problem?
The SYFI community is enraged and the Soft Yearn team is devastated. However, the project team has promised the community that they are not going anywhere. The team is now working to recreate the SYFI token. Thereafter, it will airdrop every SYFI user with the exact amount of tokens they had pre-base. The team will also add 250 ETH to the initial liquidity pool, and some community members will also contribute to the pool. Meanwhile, the rebase code will be fixed.
Our statement and how we will tackle the recent events. We will continue to update our progress on Discord and Telegram. $SYFI #softyearn pic.twitter.com/AiKHMEvuXM
— Soft Yearn Finance (@softyearnfi) September 4, 2020
The SYFI team has also announced a big bounty if someone identifies the user who exploited the rebase code bug. The official Twitter handle of Soft Yearn Finance is silent for now. However, the team promised they would regularly update the community on their Telegram and Discord channels.
On Sep 5, the team conducted a poll where it asked the community how they should proceed from here. According to the poll, 68% of users are in favor of receiving SYFI V2 tokens without an initial rebase as it will be faster. The other option was a new token airdrop with rebase working right from the start. Only 32% of the users opted for the second option.
If the team goes by users’ demand, it might soon be airdropping SYFI V2.
Overall, the crypto market is not looking good at all. Bitcoin has pulled down to $10,000, and we don’t think its the bottom. Here is why we think so.