Warp Finance Announces Promising Strides Towards Recompensating Users After $8 Million Flash Loan Attack
Warp Finance Announces Promising Strides Towards Recompensating Users After $8 Million Flash Loan Attack
December 21, 2020
Warp Finance Announces Promising Strides Towards Recompensating Users After $8 Million Flash Loan Attack
Warp Finance Announces Promising Strides Towards Recompensating Users After $8 Million Flash Loan Attack
December 21, 2020

Warp Finance, the latest decentralized finance (DeFi) protocol, has announced promising strides towards recompensating users after a nearly $8 million flash loan attack.

It has been reported that the DeFi protocol, which offers stablecoin loans on liquidity pool token collateral, lost $7.7 million in USDC and DAI when an attacker used multiple flash loans to create liquidity pool tokens, manipulate Warp’s price oracles, and drain Warp’s stablecoin coffers.

However, after the attack, a group of whitehat hackers convened to assist the protocol in assessing the damage and creating a fix for the exploit, and, in this case, recovering a portion of the lost funds.

The report said that in a post titled, “Exploit Summary & Recovery of Funds,” the Warp team notes that they could not liquidate the attacker’s loan due to the manipulated oracle, but with the help of the whitehat team managed to reclaim the liquidity pool token loan collateral.

The team said:

“The loan collateral has since been secured by the warp finance team and will allow us to return approximately 75% of users’ deposited funds, thanks to support from the Ethereum and white hat community.”

Likewise, the post said that the team is disbursing funds to affected users today and invited users to independently confirm that the snapshot they took of addresses is correct. 

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The team also doubled down on a complete compensation plan by promising the distribution of IOU tokens that will have some future utility to cover the remaining 25% loss.

They said:

“While we are relieved that lost funds have been partially recovered, we see this only as a first step to making Warp Finance users whole. For this reason we will issue Portal IOU tokens to every affected user. The end goal of the IOU token is to fully refund users, and potentially even giving them a profit on what they initially deposited.”

Thus, the Warp team’s devotion to completely covering user losses is part of what may be becoming a promising trend across exploited DeFi protocols. 

Source: Cointelegraph


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Ishita Bora

Ishita Bora is a Senior Content Creator at Digital Notice Media Labs with an experience of 1 year. She has completed her Master's Degree in Language and Linguistics in 2019 from Gauhati University, India. Her interest lies in blockchain technology and cryptocurrency space, as she loves writing about blockchain and other blockchain-related articles. Currently, she is working on blockchain-based news, reviews, featured articles, and guides.