Yearn Finance Recovers $2.4M After $9M yETH Exploit Shakes DeFi

DeFi's resilience gets a stress test—and a partial win.

The Breach

A multi-million dollar exploit targets a core Yearn Finance vault, shaking confidence in automated yield strategies. The attack leverages a vulnerability in the yETH product, siphoning funds in a flash.

The Counter-Punch

Yearn's team and white-hat community spring into action, tracing funds and executing a recovery operation. They claw back a significant portion of the stolen capital through coordinated efforts and on-chain negotiations.

The Aftermath

The protocol secures $2.4 million, mitigating the total damage from the $9 million incident. It's a stark reminder that in DeFi, the code is law—until someone finds a loophole. Post-mortem analyses and security overhauls begin immediately across the ecosystem.

The Takeaway

This episode cuts both ways: a demonstration of DeFi's capacity for self-healing, yet another expensive lesson in its inherent risks. It proves that even the smartest contracts need smarter watchdogs—and that sometimes, the best yield is the money you manage to keep. Just another day in the wild west of high-yield finance, where the only thing growing faster than your APY is the target on its back.

Security teams respond quickly

Engineers from Yearn, SEAL 911, and ChainSecurity moved into an immediate “war-room” to contain the damage. While a portion of the stolen ethereum was quickly laundered through Tornado Cash, making full recovery unlikely, investigators tracked several LST assets still linked to the exploiter’s wallets. 

These traceable assets enabled Yearn and its partners to neutralize the attacker’s pxETH positions and redirect equivalent value back to users.

The protocol emphasized that no other Yearn products were impacted. Yearn’s V2 and V3 vaults, holding more than $600 million, run on different code paths and remained completely safe. 

We are investigating an incident involving the yETH LST stableswap pool.

Yearn Vaults (both V2 and V3) are not affected.

The team reported that recovery operations are ongoing and more assets can be retrieved provided there are on-chain opportunities.

Past incidents add pressure on DeFi security

The incident adds to a string of recent DeFi exploits. In late November, Prisma Finance and Raft Finance also reported losses due to contract flaws and compromised keys. 

Curve itself suffered a major exploit earlier in the year because of a Vyper compiler bug, highlighting long-standing concerns about legacy contracts and the complexity of DeFi infrastructure.

What’s next for Yearn Finance

Yearn plans to release a full post-mortem once audit partners finalize their review. Users affected by the exploit can request support through Yearn’s Discord. The protocol is also examining older contracts to avoid such vulnerabilities.

Although YFI plummeted by about 10% following the exploit on November 30, the token regained part of its losses following the announcement of the partial fund recovery, which helped stabilize the mood regarding the ecosystem. At the time of writing, it was trading at $3,693, as per CoinMarketCap data.

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