Decentralized platform Warp Finance has suffered a major hack, as the newly launched company loses $7.7million worth of DAI and USDC stablecoins.
The hacker withdrew the said amount from the platform using a flash credit scheme. The loan scheme allows the users to get short-term loans without collateral as long as the loan is repaid immediately in one block. This is not the first time cybercriminals have used this handy feature to steal funds from platforms this year.
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Warp Finance says it will return most of the funds
The team behind Warp Finance have confirmed the incident and advised users to stop placing deposits on the platform until the circumstances are controlled.
Yesterday evening, the community members noticed irregular activities on the Warp Finance protocol. An unknown user used the flash loan scheme to drain the DAI and USDC vaults of the protocol through multiple transactions.
The hacker utilized a complex scheme to retrieve a value much higher than the collateral limit, making the lender lose money.
The Warp Finance team assured users that the team will replace the majority of the stolen funds and they shouldn’t be worried. The team claims there is about $5.5 million worth of tokens lying around in a collateral vault, and the team plans to use the money to cover the losses.
Hackers taking advantage of growing DeFi space
The growing decentralized finance (DeFi) space has been a subject of the latest hacking attacks The hackers are taking advantage of the significant growth of the DeFi space which has garnered billions of dollars stacked in multiple protocols. It has attracted hackers who are using every single opportunity or loophole to attack and steal funds.
The platform was launched only 9 days ago. It enables users to deposit crypto assets in exchange for stablecoins.
If the company succeeds in recovering funds, it plans to return them to affected users. However, there will still be about a $2.2 million loss to users after the recovery. Warp Finance has promised it will work on something that will compensate those clients, but not immediately.