Warp Protocol Hack

What happened

Warp Finance was exploited on December 17, 2020 after its Ethereum lending contracts overvalued Uniswap LP tokens used as collateral. The attacker borrowed $7.76 million against collateral worth less than the loan. Warp later distributed recovered LP tokens valued at $5.688 million, approximately 73% of affected funds.

Technical root cause

The LP pricing formula used manipulable reserve snapshots even though its underlying prices were time-weighted. Changing reserves within the transaction could increase the calculated LP value.

How it happened

1. The attacker used flash liquidity to acquire DAI/WETH LP tokens and make a large swap in the same pool.
2. The swap distorted current reserves. Warp combined those reserves with time-weighted underlying prices, producing an inflated collateral valuation.
3. The attacker deposited the LP tokens, borrowed DAI and USDC, and repaid the temporary liquidity, leaving an undercollateralized loan.
4. Responders secured the collateral. Warp reported distributing it to users on December 22, with further compensation still planned.

Protocol details

Classification Ecosystem / Oracle Manipulation / Borrowing and Lending

Protocol Type Lending

Affected asset / contract WARP

Implementation language Solidity

Protocol links Website @warpfinance

Security review history

• Trail of Bits View report

Funds Recovery

74.4%

Recovered

$5.8M

Net Loss

$1,996,800

Evidence

• report Post-mortem rekt.news
• analysis Warp Finance — Exploit Summary & Recovery of Funds warpfinance.medium.com
• analysis DeFiLlama defillama.com
• analysis Pricing LP tokens | Warp Finance hack cmichel.io

Understand the attack patterns

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