Q1 2023 — Warp Finance Update

Warp Finance
7 min readApr 7


Opening Words from the Team

Dear fellow Travelers,

We are excited to share with you our first quarterly update as a newly organized team. As you may recall, in mid-January we announced that Warp Finance was leaving the Advanced Blockchain incubator to regain full control over the protocol and product. Since then, we have been working hard to put ourselves in a better position to achieve our goals. We knew that leaving the Advanced Blockchain incubator was a risky step, as we were leaving a safe harbor, but still it was a required one to make the progress we need to finally release a working product with great product-market-fit.

The first quarter was filled with background tasks that were necessary to stay sovereign and to remove legacy issues from the past. Despite these distractions, we are proud to report that we made more progress during Q1 2023 than we did during the second half of 2022 during which we have released the Warp v2 Beta.

We were able to renegotiate all open liabilities and free up enough budget to continue development of the protocol. At this moment we are also happy to confirm that we indeed have enough funding to release Warp Finance version 2 which will have a new focus and which will be explained more a bit below. We are now standing on our own feet again, working with our own infrastructure and developing the future of Warp Finance with our own budget. Only we as a team and as a community are dictating the path of the $WARP token and the product, and it is our responsibility to revive Warp and make it useful and relevant again.

To achieve this mission, we need a good team. While at this point — due to budgetary constraints — we are not able to hire developers full-time for this enterprise , we have attracted outstanding contributors to work with us on a gig basis. We have instituted an internal policy that individuals working on Warp Finance shall be introduced to the community after three months of involvement . It is up to each person if they want to stay anonymous, but we want to give at least some information so that the community knows who is working on the product actively.

The current team consists of three core members, managing all aspects of the creation of a successful Warp v2 product and taking care of running the company behind Warp Finance, as well as one smart contract developer, one full-stack developer and one designer. Most team members have already worked with Warp Finance before, which brings valuable experience to the team and leads to gains in efficiency.

With the majority of the background and transition tasks being completed we are thrilled to announce that Warp v2 is not only progressing, but that we […drumroll… ] are planning to release it in the second quarter of 2023! We currently aim to start final quality assurance checks around mid-June with a launch following shortly after.

We realize that our success depends on the trust and support of our community. We are committed to being transparent and open with you, and we will continue to share updates on our progress. Although we may not always reply immediately, we want you to know that we still read and value your feedback and questions.

With the upcoming new features in the v2 release, Warp Finance will have a chance to once again become an innovation leader in the DeFi space, offering a unique and powerful solution to users.

Over the next week we will release another post with answers for the questions you have asked on Discord and on the Telegram channel.

Renewed Focus for Warp v2: Arbitrum Launch and 1-Click Leverage Looping with No-Liquidation Guarantee

Arbitrum Launch

Many of you reading this have been part of the Warp Finance community for quite some time. Warp Finance’s mission has always been to expand the DeFi lending universe. As the first lending platform built for yield-bearing receipt tokens, Warp was at the forefront of innovation in the space.

Today, indisputably much of the greatest innovation in crypto takes place on Ethereum Layer 2s. Particularly, Arbitrum has established itself as a leading protocol and DeFi hub among L2s, recently approaching and even flipping Ethereum mainnet in daily transactions. Massively lower fees on L2s compared to mainnet enable efficient trading also with smaller amounts per transaction, while still leveraging the security of Ethereum.

We believe the thriving Arbitrum DeFi ecosystem is an ideal environment for Warp v2 to be the first to see the light of day. It combines the benefits of low transaction costs with plentiful options for interesting token pairs with juicy yields.

Accordingly, we are more than happy to announce that Warp v2 will first be launched on Arbitrum! As mentioned above, the launch ETA is end of June. We are extremely excited regarding the potential that this decision opens up, particularly the multitude of mutually beneficial opportunities that may arise for Warp and other DeFi protocols from the Arbitrum ecosystem.

This, however, by no means implies that there will be no further mainnet deployment in the future. We will focus on a successful Arbitrum launch first, but then immediately move on to mainnet. We expect the mainnet launch of Warp V2 in Q3 2023.

1-Click Leverage Looping

Beyond the launch timeline, there is also exciting news at the product level itself. Longtime readers with a good memory will recall Mr. Stiive’s visionary explanations of how Warp v2 will be able to leverage fixed income APYs to highly attractive 3-digit returns — in many cases with a no-liquidation guarantee.

A true innovation in DeFi and a very strong USP for Warp! If you would like to refresh your memory, please take a look here: https://warpfinance.medium.com/the-warp-magazine-edition-02-ebb4279798a5.

This vision is now rapidly becoming reality. Our solidity developer recently finalized a sub-protocol enabling a feature we call “1-Click Leverage Looping”.

Steps included in this feature in a traditional sense would be akin to:

1. Adding collateral (i.e. yield-bearing assets)

2. Borrowing debt against collateral

3. Using debt to buy more collateral (i.e. multiplying the yield)

4. Adding more collateral, and repeating at step 2.

However, in technical implementation, the process is more like:

1. Receive final state from UI (upfront collateral, desired_collateral, debt), and check LTV math

2. Flash loan (desired collateral-upfront collateral) to buy desired collateral

3. Buy and transform collateral using flash loan funds (via aggregator such as 1inch to achieve best price)

4. Add desired collateral as collateral on Warp

5. Borrowing debt against collateral

6. Use debt to pay off flash loan

As mentioned above, the codebase for this feature is completed and will undergo audits in a next step.

Users will be given the option to highly leverage up (on fixed-rate positions even without liquidation risk), and by doing so multiply the returns they collect on the yield-generating assets deposited into Warp v2 as collateral — all with one click.

Because of the superior risk-reward ratio this feature provides, we believe it will be the strongest attractor for Warp v2 users (next to our Chisel liquidity vaults, read about those here: https://warpfinance.medium.com/the-warparmy-returns-359a098026bf) .

Consequently, we are currently in the process of gearing the entire UI primarily towards this leverage looping function (and less towards the borrowing aspect). The brand positioning of Warp will be that of a DeFi-wide (fixed) yield extractor, rather than a lending protocol. This will be the gist of all our marketing activities going forward.

To condense it into one sentence (and potentially coin a new term along the way):

With v2, Warp evolves from being a lending protocol to become a “looping protocol”!

Q1 2023 — Achievements

Since February we have been releasing weekly update notes in the official Warp.finance Telegram group chat. Underneath is a summary of the progress we made in regards to the product. As mentioned above Q1 2023 had many back office and operational tasks (like onboarding new people) which are not listed here:

  • Chisel smart contract code has been updated based on the audit report we have received including fixes for one critical, two major, three medium and other minor/informational
  • Leverage Looping functionality has been architectured and smart contracts have been developed
  • Improved UX by fastening screen loading time for Borrow and Lending pages
  • Redesigned the Market Overview page to accommodate the new looping focus

Other task which have been kicked off but are still in progress:

  • UX/UI redesigns and updates for the Portfolio, Borrow, Lending and Supply pages
  • Integration of the Chisel frontend design with the smart contract code
  • Fixing an issue preventing a proper liquidation process
  • TVL Launch Event
  • Finding smart contract auditor
  • Pre-selection of Looping Pairs to launch Warp v2 with

Overview of Workload

To give a better understanding of how we are structuring our work and to improve updating on them we want to share a high level overview of the workload for the release of Warp v2. Please keep in mind that we have this structure to organize internally and to keep track of our work and not primarily to share with the community. The structure still may change over time.

For the current phase we have decided to wrap all activities in so-called “Statement of Works” (aka SOW). An SOW is a bundled work package covering activities for a certain deliverable (e.g. a new feature for the product). At Warp Finance an SOW contains many different needed skills like different development capabilities, software architecture, design for the frontend and general decisions on how it should work. The current SOWs we have are the following:

SOW #1 — Chisel

SOW #2 — TVL Drive Event

SOW #3 — Leverage Looping

SOW #4 — Liquidation Issues

SOW #5 — Price Oracles

SOW #6 — Arbitrum Launch: Adapters & Pair Deployments + Application Deployment

SOW #7 — Design & Frontend Updates

SOW #8 — Ethereum Mainnet Launch

SOW #9 — Partnerships & Business Development

SOW #10 — MarCom for Release

SOW #11 — Documentation

SOW #Other & Internal

For upcoming updates we will make progress per SOW visible by visualizing the status and completion percentage for each SOW.



Warp Finance

DeFi’s first isolated lending protocol that optimizes yield-bearing receipt assets, and much more!