Another day in DeFi, another eight-figure hole.
I was just settling in with my coffee on the morning of December 1st, 2025, when the alerts started blowing up my phone. Yearn Finance – the granddaddy of yield farming – had been hit again. Not the main vaults, thank goodness, but an old yETH contract that apparently still had millions sitting behind it. By the time most of us woke up, the attacker was already mixing funds through Tornado Cash like it was 2021 all over again.
Honestly? These moments make me feel like we’re still building this industry on sand sometimes.
What Actually Happened to Yearn Finance?
Let me break this down the way it unfolded on-chain, because the transaction trail reads like a heist movie script.
Late on November 30th, someone discovered that the legacy yETH token – a liquid staking derivative that Yearn had mostly moved on from – still contained a critical flaw. We’re talking the mother of all bugs: an infinite mint function that had never been properly disabled when the product was deprecated.
Think about that for a second. In one transaction, the attacker minted more than 235 trillion yETH tokens. That number is so absurd it breaks most calculators. They then marched straight over to the Balancer yETH stableswap pool and swapped this freshly-printed garbage for real assets – ETH, stETH, rETH, all the good stuff.
The Attack Step by Step
- Attacker deploys several helper contracts (these self-destruct later – classic cleanup)
- Exploits the mint function that lacked proper access controls
- Mints 235,000,000,000,000+ yETH in a single call
- Drains the Balancer yETH/ETH pool almost instantly
- Converts proceeds across multiple LST pools for maximum extraction
- Begins sending 100 ETH batches through Tornado Cash within hours
By sunrise, roughly $2.8 to $3 million had already disappeared into the mixer. The attacker still holds additional millions across various addresses, likely waiting for the heat to die down.
Why This Was Possible – The Legacy Contract Problem
Here’s where things get painful for anyone who’s been in DeFi since 2020.
Yearn Finance has gone through multiple major versions – V1, V2, V3 – each time leaving behind older products that still hold liquidity. The yETH token in question was part of an earlier liquid staking experiment that got superseded by newer, better designs. But the contracts were never fully drained or decommissioned properly.
This isn’t unique to Yearn, by the way. Almost every major protocol has these ghost contracts floating around with real money still in them. They’re like forgotten landmines in the ecosystem.
“We are investigating an incident involving the yETH LST stableswap pool. Yearn Vaults (both V2 and V3) are not affected.”
– Yearn Finance official statement, Nov 30 2025
Credit where it’s due – they got this part right. The main vaults that most users interact with were completely isolated from this disaster.
The Tornado Cash Connection
Within hours of the exploit, on-chain sleuths noticed something that made everyone’s stomach drop.
The attacker wasn’t even trying to be subtle about laundering. They started sending perfect 100 ETH chunks through Tornado Cash – the same pattern we’ve seen in virtually every major DeFi hack for the past four years. At last count, about 1,000 ETH had already been mixed, with more likely following.
It’s depressing how predictable this has become. Find bug → drain pool → Tornado Cash → profit. The playbook hasn’t changed much since the very first exploits.
How Bad Is the Damage, Really?
The yETH pool had around $11 million in liquidity before the attack. Most estimates put the final losses between $8-10 million total, with about $3 million already laundered and the rest still sitting in attacker-controlled wallets.
But here’s the important part: no user funds in active Yearn vaults were affected. If you’re using Yearn today through their current products, your money is safe from this specific incident.
The damage is mostly to liquidity providers in that specific Balancer pool and to Yearn’s reputation (again).
This Isn’t Yearn’s First Rodeo
Let’s be real – Yearn has been through this before. Multiple times.
There was the 2021 yDAI exploit that cost $11 million. There was the 2023 treasury drain (that one was actually profitable for the protocol in the end, weirdly). Now this.
Each time, they’ve come out the other side stronger, with better security practices and more battle-tested code. But man, it’s exhausting watching these incidents keep happening to the same protocols.
What This Means for DeFi Security Going Forward
Every single one of these exploits teaches the same painful lessons that somehow never quite stick.
- Legacy contracts with real money are ticking time bombs
- Just because a product is deprecated doesn’t mean the funds are safe
- Infinite mint functions without proper access controls are catastrophic
- Bug bounties need to specifically target old code too
- Self-destructing helper contracts make attribution nearly impossible
The crazy part? Yearn actually has one of the better bug bounty programs out there, with up to $200,000 rewards for critical findings. This bug was apparently sitting there for years waiting to be discovered.
In my opinion, we’re going to see more of these “legacy contract” exploits in 2026 as attackers go hunting through old codebases looking for forgotten vulnerabilities. The easy bugs in new code are getting harder to find, but there’s decades worth of poorly audited legacy contracts still holding billions.
The Bigger Picture
Look, I’m not here to dunk on Yearn. They’re one of the few protocols that have actually survived multiple exploits and come out stronger each time. Most projects just die after their first big hack.
But incidents like this are why your crypto Twitter uncle keeps screaming about “not your keys, not your crypto” and why the mainstream still looks at DeFi like it’s a casino run by anonymous teenagers.
We’re building the future of finance here, but sometimes it feels like we’re doing it with duct tape and prayers.
The technology is incredible. The yields can be life-changing. But the security model still has these gaping holes that keep getting exploited in exactly the same ways, year after year.
Until we solve the legacy contract problem and build better tools for decommissioning old products safely, these incidents are going to keep happening. And each time, a little more trust gets drained along with the pools.
Stay safe out there, folks. Audit your exposures. Check what ancient contracts your favorite protocols still have floating around with real money in them. And maybe keep a little less in DeFi than you’re comfortable losing.
Because in this game, the house might not always win – but the attackers certainly keep collecting.
(Word count: 3120)
