Warp Finance Included Chainlink Oracles Integration to Reduce Flash Loans Happening

By Katelyn James | January 16, 2021

Warp Finance – a DeFi lending protocol underwent flash loan exploit causing $8 million in financial damage shortly after its rollout – is reportedly preparing for a re-release with a Chain Link-enabled oracles integration. 

Specifically, the included Chainlink oracles will reportedly function as a shield towards exploits of the same kind. Flash loan exploits utilized a function that supported the borrowing act of unlimited funds, provided that it is also returned in the similar Ethereum block. Per the team, the primary factor that led to the exploit was an exploitable price oracle.

The problem reportedly appeared to be made up via Warp Finance’s use of liquidity provider tokens for collateral. This function is reportedly among the primary selling points of the protocol, since it supports employing yield-bearing tokens to become collateral, combining both the yield from trading fees and from borrowers using the protocol.

Per DeFi whitehat hacker Emiliano Bonassi, the exploit was reportedly dependent on the fact that Warp Finance oracles did not run precise calculations to the underlying value of the pool tokens. 

The new protocol will reportedly employ Chainlink price feeds for every critical feature, notably the value of the LP tokens used for collateral.

Chainlink and its founder, Sergey Nazarov, normally have an unwavering attitude, regarding the fact that price oracles have to have as much coverage of the market as they can, since the number of flash loan exploits coming from market manipulation is reportedly higher than outright software bugs.

Even in scenarios where malice is not involved, incidents, nominally Compound’s excessive liquidation event in November last year, could have been avoided if market coverage level is higher. 

Compound reportedly depends solely on prices from Coinbase and Uniswap, which at the moment is posting a highly inflated price for Dai.

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