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Summary
- Warp Finance has recovered nearly three fourth of the funds lost in the flash loan attack
- It has been working to ensure the security of the platform and return the funds to affected users
- The decentralised finance platform has decided to issue ETH/DAI-LP tokens these users
Warp Finance, a decentralised finance platform, recently informed that it has recovered a sum equivalent to 75 per cent of the losses recognised in the flash loan attack that took place on 17 December. According to the platform, the value of recovered funds is nearly equal to $5.85 million. Warp Finance team has secured the loan collateral with assistance from the white hat and Ethereum community.
Funds to be distributed
The recovered funds are expected to be distributed to the affected users in 24 hours. The quantum of funds that will be transferred will be proportionate to the amount of W-USDC and W-DAI at the time of snapshot, Warp Finance said via Medium.
The ETH/DAI-LP tokens will be distributed to the affected users equivalent to 75 per cent of the total worth of USDC and DAI deposit amount. With the partial recovery of the funds lost during the flash loan attack at Warp Finance, Portal IOU tokens will be issued to the affected users.
Warp Finance is making sure that the affected users will receive full refunds as against their respective deposits, even with a profit on the initial deposits with the issuance of IOU tokens. At the moment, Warp Finance is working to ensure complete security of the model, returning the recovered funds, and auditing the distribution contracts, the platform informed.
What actually happened
An attacker exploited and drained a sum to the tune of $7.8 million from the vault of Warp Finance. As per the portal, the attack was initiated late night on 17 December. The attacker manipulated the price of UnisawpV2 pair (WETH-DAI) LP token by using the AMM-based oracle (Uniswap).
The attacker borrowed the amount nearly double to what it was supposed to be of USDC and DAI from the lending platform of Warp Finance following the flash loan induced price manipulation on Unisawp.
As per media reports, the attacker didn’t recognise an immediate profit as the LP tokens deposited by the attacker are locked and held as collateral in Warp Finance lending platform. However, the user was able to withdraw a loan of $7.76 million with a gameable oracle after the Warp Finance protocol experienced a flash loan exploit. The value of the collateral held was less than the loan due to the nature of the exploit.
Multiple flash loans via dydX, instances of flash liquidity and various flash swaps via Uniswap were involved in the exploit that was executed by the user. The attacker was able to remove $7.8 million of DAI using the technique. After the attack, Warp Finance has realised that the platform relied on vulnerable Uniswap LP token prices.
