Warp Finance exploited for $8M in a possible Flash loan attack

According to DeFi Prime, a DeFi tracking portal, Warp Finance was exploited, Thursday for an $8M attack. As shown in the etherscan, DeFi Prime suggests it is a flash loan attack.

Warp Finance is a new DeFi platform announced in early November that enables users to deposit liquidity provider (LP) tokens from other protocols and receive stable coin loans in exchange.

Warp Finance through a tweet, Thursday 17, said;

“We are investigating irregular stablecoin loans taken out in the last hour, we recommend that you do not deposit anymore stablecoins until we have clarity on the irregularities”.

Immediately after the attack, white hat hackers started investigating vulnerabilities. Co-founder of the Marqet Exchange, Emiliano Bonassi, has also reported having been delving into what happened to state;

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

He sighted that attackers asked for three wrapped Ether loan via flash swap to three different pools, Uniswap and two others on dYdX. He added that they were used to mint WETH/DAI afterwards. The minted liquidity pool token, WETH/DAI were used as collateral on Warp Finance to clear out its USDC and DAI vaults.

How to go about a similar occurrence is a non-custodial wallet where users have all the access and keys. For instance, a cold wallet like BC Vault is preferred.

If your wallet is in the hands of a third party, there is a likeness that you may lose your coin someday. However, that may happen because the third party is open to bugs and as such prime targets. Concurrently, placing your keys on your hand is your best way to secure your crypto.

The need for cold wallets can not be emphasized, therefore, below are a few reasons why you need it; 

  • It covers a higher percentage of the unbanked. 
  • You don’t need the internet. 
  • Protected against malware, even if you connect to exchanges. 

Conclusively, it is your choice to either risk your assets or pays a few bucks to secure them as long as you want. With wallets like BC-Vault, you take some rest from the burnt of hacks once you have one.