Mustang Finance

Update on the @Sagaxyz__ security incident and its impact on yUSD / vyUSD vaults YieldFi entered into an LP agreement with Barn Yard Foundation ("Saga") dated 12/12/2025, pursuant to which YieldFi provided liquidity on SagaEVM chain and Saga agreed to provide remediation for certain losses attributable to Saga’s technical infrastructure (including exploits/hacks, subject to the terms of the agreement). On 21/01/2026, an unknown actor exploited Saga’s infrastructure, resulting in the unauthorised minting of D tokens (Saga’s native stablecoin) and the loss of assets from DeFi positions on Saga chain. Based on our current analysis, the incident resulted in the loss of approximately 5.9m USDC, 676k yUSD, and 62.62 yETH attributable to yield strategies on Saga. In connection with the incident, YieldFi received 10.14m D tokens, 377k MUST tokens, and 103 USDC. The market value and convertibility of these tokens may be volatile and could change materially when SagaEVM resumes. Accordingly, these tokens should not be assumed to represent a USD-equivalent recovery at this time. We have taken operational and on-chain mitigation steps available to us, including freezing measures affecting the hacker’s yUSD and yETH where technically possible. The USDC loss is not directly reversible by YieldFi through such measures. Remediation status We have formally asserted a contractual claim against Saga under the LP agreement and are actively working with the Saga team to finalise a remediation plan intended to restore affected vault LPs. Our focus is to agree enforceable, time-bound remediation terms and a settlement mechanism that is robust to token price volatility and conversion conditions. Redemptions (yUSD and vyUSD) Because approximately 97% of yUSD and vyUSD redemptions depend on the outcome of the remediation process, and to ensure equitable treatment of LPs, we have paused yUSD and vyUSD redemptions pursuant to the Vault Terms (exceptional event / liquidity protection framework). We will review this pause on a regular cadence and publish updates as we reach milestones with Saga and/or remediation terms are finalised. Vault segregation and impact scope Only yUSD and vyUSD are impacted by this incident. All other vaults (including yPrism, yETH, vyETH, yBTC, vyBTC, etc.) remain operational and unaffected. Each vault operates with segregated wallets, accounting, and strategy exposure; one vault’s performance does not transfer to another. Snapshot (01/02/2026) Below is a snapshot of the V2 vaults’ assets and liabilities as of 01/02/2026: LP support If you are an LP in yUSD or vyUSD and have questions, please reach out to us on Telegram. We are also contacting known LPs directly to ensure everyone receives consistent information. Our next discussion with Saga team is on Tuesday. We will continue to provide updates as remediation terms progress.