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Yearn Finance confirmed an active exploit affecting the yETH product on Sunday, after an attack counted unlimited amounts of yETH and drained liquidity from Balancer pools.
The incident spurred significant traffic on the network, including transfers of several 100 ETH made via Tornado Cash.
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Borderless mint attack drains liquidity from Balancer pools
According to blockchain data, the exploit occurred around 21:11 UTC on November 30, when a malicious wallet performed an infinite minting attack that generated approximately 235 trillion YETH in a single transaction.
Nansen’s alert system later confirmed the attack and identified the event as an infinite minting vulnerability in the yETH token contract, and not in the Yirn treasury infrastructure.
Use the striker Newly Minted YETH To drain real assets – mainly ETH and Liquid Staking Tokens (LST) – from Balancer’s liquidity pools. Early estimates indicate that approx $2.8 million in assets.
Circa has been whitewashed 1,000 ETH Through Tornado Cash shortly after the attack. Several utility contracts used in the exploit were published minutes before the incident and then self-destructed to hide the trace.
Yern said that Vaults V2 and V3 are not affectedThe vulnerability appears to be limited to the old yETH implementation.
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The total value of the protocol (TVL) remains above $600 million, according to CoinGecko, indicating that the underlying systems have not been hacked.
The price of YFI rises as the market reverses the initial panic
However, the market reaction created an unexpected dynamic. Shortly after the exploit was spotted on social media and by blockchain analysts, The price of YFI rose sharplywhich rises from about $4,080 to more than $4,160 in an hour.
This move came despite negative headlines surrounding the vast Yern ecosystem.
The price reaction seems to be related to Misinterpretation of the market In the first minutes of the accident. Initial allegations of an “exploit of the year” prompted highly leveraged short positions on YFI, given the token’s limited liquidity and its historically strong downward movements during breakout events.
The attack was isolated to YETH and not Yearn’s vaults, and short sellers began covering their positions. This led to a short-term pressure and a spike in price caused by volatility.
YFI rolling offer only 33,984 coinsmaking it one of the best managed assets in the world DeFi liquidity. This structure amplifies price movements, especially during periods of uncertainty or rapid liquidation flow. Derivatives data also showed high volatility of funding immediately after the exploit alert.
Currently, the losses appear to be limited to the YETH and Balancer pools affected by the exploit. Investigations remain ongoing, and it is unclear if there are any options to recover the stolen property.
Markets will likely look to an official disclosure from Yearn outlining the root cause, remediation efforts and proposed governance actions.
