An alleged trader on the Uniswap decentralized exchange claims she/he made close to USD 270,000 in profits after exploiting a bug with the rebase functionality of the recently listed token Soft Yearn (SYFI).
The claim was made through an anonymous Twitter account called Amplify on Monday this week, with the person claiming that she/he is “the person who sold SYFI on [Uniswap] at the same time as the Rebase.”
SYFI is a token designed to be “soft pegged” to the price of yearn.finance (YFI) through a built-in “rebase” mechanism that automatically adjusts the token supply. In addition to SYFI, rebasing as a tool to control price has also been used on projects like Yam Finance (YAM) and Ampleforth (AMPL).
According to Amplify, it was a bug with the rebase mechanism of SYFI, which she/he said was released with “unaudited code,” that in the early morning of September 3 allowed him to instantly turn an initial investment of ETH 0.5 (USD 182) into ETH 740 (USD 270,000).
“Minutes before the Rebase I decided to buy back into SYFI with my initial investment of [0.5 ETH], I already made 1.5ETH. I had nothing to lose, right?,” Amplify said before she/he went on to explain what happened next:
“I am staring at the [Uniswap] UI with bated breath when the 2 SYFI turns into 15,551, and subsequently the price quote for these tokens being over 740ETH. My immediate thought is: This is a UI bug, it’s going to bait me into sending a transaction I know will fail because of insufficient output amount.”
However, on second thought, Amplify decided to go ahead with the transaction: “Seeing what I saw, don’t tell me you wouldn’t,” the person wrote.
And as we now know, the trade paid off, making Amplify, who described herself/himself as having “a small trading account,” close to USD 270,000 as the rebase happened by giving ETH to her/him and taking it away from other SYFI holders.
“I am not justifying my actions as being a betterment to society, however; I am condemning the actions of the developers for having the balls to ask for a PRESALE for a forked coin and pushing it with unaudited code,” Amplify said.
The exploit led to the collapse of the Soft Yearn project, with SYFI’s token price on September 4 falling from close to USD 100 to USD 0.002, and trading volume on Uniswap largely evaporating.