Warp Finance loses $7.7 million in a flash loan attack
2 min readTL;DR Breakdown:
- Warp Finance reportedly lost over $7 million in Dai, and USDC stablecoin affected a flash loan attack.
- The issue of protocol exploitation is becoming a threat to the mainstream growth of DeFi.
It’s no doubt that the decentralized finance (DeFi) industry gained lots of traction this year. With increasing participation, the value of assets locked in DeFi is nearing $16 billion. Although the growth is undeniable, the industry arguably faces a huge loss this year, amid protocol exploitation. Many new protocols had lost millions of dollars to bad actors, with the latest being Warp Finance.
Warp Finance loses Dai, USDC
The “complex” flash loan attack, which happened earlier today, enabled the attacker to borrow “more than their collateral value resulting in a loss of stablecoin lender funds,” the protocol team informed on Twitter. The unknown attacker drained $7.7 million worth of stablecoins from the lending protocol. Although Warp Finance didn’t specify the exact stablecoins lost, about 3.92 million USD Coin (USDC) and 3.85 million DAI was moved from the protocol, per Hex Capital’s Nick Chong.
There wasn’t any in-depth explanation from Warp Finance on how the flash loan attack was carried out. However, they informed on Twitter about having a plan on how to regain about $5.5 million still locked in the collateral vault. When recovered, the fund will be reimbursed to the affected users. The development today is probably the second protocol hack report this week.
There’s a lot to be fixed
About four days ago, the CEO of Nexus Mutual, was involved in an attack that resulted in the loss of huge NXM tokens worth more than $8.8 million, at the time of the incident. The hacker, who’s demanding about $2.6 million, is yet to be uncovered, although the CEO offered to pay a $300k bounty. These protocols may be losing funds wilfully, the fact that hackers could still exploit some protocol question the safety of asset in the industry; hence, a drawback for DeFi mainstream adoption.
BNC Researchers reported last week that the “security” is one factor that needs to be worked up in many protocols for the industry to gain massive traction.
