Market Cap
24h Vol
7051
Cryptocurrencies
76545
Markets
2021-01-11

Warp Finance's next steps

Warp Finance, a DeFi loan protocol that was used for a $8 million flash loan shortly after its launch, is preparing to restart, which will include integration with the oracle by Chainlink.

The integration of the Chainlink oracle is said to serve as protection against similar exploitations. The operation of the flash loans uses a feature that allows for borrowing an unlimited amount of money if it is also returned within the same Ethereum block. According to the team, security experts found that the main cause of the exploit is the price oracle.

This issue seems to have been exacerbated by Warp Finance's use of liquidity provider tokens as collateral. This feature is one of the main advantages of the protocol, as it allows for the use of profitable tokens as collateral, combining both the profit from trade fees and the profit from borrowers using the protocol.

According to DeFi hacker Whitehat Emiliano Bonassi, the use was based on the fact that Warp Finance departments did not correctly calculate the base value of the pool tokens. The new protocol will use Chainlink price channels for all critical functions - especially for the value of LP chips used as collateral.

Chainlink and its founder, Sergey Nazarov, have often insisted that the price judgments must cover as much of the market as possible. Indeed, many of the exploits of flash credits are closer to market manipulation than simple software errors. Even if there is no malice, incidents such as the excessive liquidation of Compound in November could have been prevented by greater market coverage. Compound relied solely on prices from Coinbase and Uniswap, which temporarily gave very high prices to Dai.