Warp Finance Recovered $5.8 Million A Few Days After The Hack

Warp Finance recovered $5.8 million a few days after the flash loan attack as we reported in our cryptocurrency news.

The project was hacked out of $7.7 million in a flash loan attack but now it turns out that Warp Finance recovered $5.8 million worth of user funds in the form of a liquidity provider token. Wrap will also issue IOU tokens for the users but the hacker s still hold the stablecoin funds. Defi project Warp Finance said back on Sunday that the efforts to recover the stolen funds from the flash loan attack were partially successful with over $5.85 million recovered today.

On December 20th, 2020 at 0216 UTC we successfully recovered the loan collateral from the exploit, in the form of ETH/DAI-LP tokens. The value is approximately $5.85m, which is ~75% of the $7.76m lost funds.

Full statement: https://t.co/SzrE3irylJ

— warp.finance (@warpfinance) December 20, 2020

The project is actually a decentralized lending platform that allows users to deposit Liquidity Provider tokens that are issued to all those that provide liquidity on decentralized exchanges like Uniswap and also take out stabelcoin loans. Warp said that it was able to recover the liquidity provider tokens which represent the collateral for $5.85 million according to the statement:

 “We successfully recovered the exploiter’s loan collateral in the form of ETH/DAI-LP tokens. The value is approximately $5.85m, which is ~75% of the $7.76m lost funds.”

The project said it would later distribute the recovered funds to the affected users in the next 24hours and the amount will probably reach 75% of the liquidity token amount deposited by users since $7.7 million of the stablecoins have not been recovered yet. Apart from the victims, Warp said they will also compensate all users that deposited liquidity tokens after the attack led to a loss. As an additional gesture, the project added they would issue a Portal IOU in the upcoming days to make up for the losses.

Taking a look…https://t.co/UzyDETcmur

This is the second attack whish uses multiple flash liquidity,
flash swaps via Uniswap and flash loans via dYdX

We will see very complex things via @AaveAave V2 batch flash loans 🙂 https://t.co/jAjWa3WAi6

— Emiliano Bonassi | emiliano.eth (@emilianobonassi) December 17, 2020

Warp Finance attracted millions of dollars of liquidity provider token deposits from the users since the launch in November. However, the attack involved a faulty oracle which is a third-party service that retrieves data from different sources to the blockchain which was conducted and the hackers were able to withdraw a $7.7 million loan as a few researchers pointed out.

The attack was one of the few in the serious hacks against DeFi projects which saw hackers manipulating oracles to trick these protocols into unlocking a far bigger amount than what their staked collateral allowed. The Defi projects improved the security measures and implemented changes to fight off the oracle-led hacks.