DeFi Degens Hit by Eminence Exploit Recover Some Losses

Eminence didn't even have a website to use as a front-end for trading; the first users instead swapped tokens directly with the Eminence smart contracts.

The EMN tokens, generated by the Yearn Deploy smart contract, were distributed initially through a bonding curve, a novel token distribution scheme used by a handful of DeFi products.

These bonding curves are smart contracts which "Trade" tokens with end users, dispensing one in exchange for another.

Doing so would burn the deposited EMN. Inversely, if you deposit these tokens into their respective bonding curve contracts, it is burned and you receive newly minted EMN.To exploit these contracts, the attacker took out a flash loan for 15 million DAI from Uniswap and used this to buy EMN. He then traded and burned half this EMN for eAAVE, driving up EMN's price.

A handful of developers, one of whom works on Yearn, cooked up a way to distribute the DAI to users affected by EMN's price crashing through the floor as a result of the exploit.

DAI-denominated reparations are now being distributed to users who trade for EMN from the bonding curve contract and Uniswap.

A single retweet from the guy behind Yearn - that DeFi unicorn which surged in price from $31 to over $43,000 this year - was enough for traders to pile into Eminence's token.

So-called DeFi degens have a reputation of "Aping" into smart contracts in search of gains before they are thoroughly vetted.

More recently, traders deposited so many tokens into the then-unaudited SushiSwap contract that its volume surpassed Uniswap.

With this Eminence exploit and summary restitution now in the books, DeFi traders have another reason to be leery of unvetted protocols.