Warp Finance Will Integrate Chainlink Price Feeds to Secure Protocol Relaunch
Upon the recent flash loan exploit, for which 73% of users' funds were recovered, we have been in contact with multiple security experts to determine the next best steps for ensuring a safe relaunch of the Warp Finance protocol. After determining that the root cause of the exploit was an insecure, gameable price oracle, we set out to find the most robust oracle solution in the market. Our research and due diligence concluded that Chainlink was the most secure, reliable, and proven oracle solution, and will protect the Warp Finance ecosystem from similar flash loan-funded price oracle attacks moving forward.
As a borrowing and lending protocol for Liquidity Provider (LP) tokens from a variety of AMMs, the security of user funds is paramount to our success. As part of the Warp Finance protocol relaunch, we will use Chainlink Price Feeds for all supported assets, ensuring user funds are protected at all times against both previous exploits. This includes using Chainlink Price Feeds for DAI/ETH, BTC/ETH, USDT/ETH, and USDC/ETH, which are used to determine the valuations for both the stablecoins being lent by users as well as the LP tokens being used as collateral within loans.
Backed by proven cryptoeconomics, high-quality data, and provably secure and reliable oracle infrastructure, Chainlink’s time-tested and battle-hardened Price Feeds will ensure the Warp Finance protocol is resistant to flash loan attacks and consistently consuming price data that reflects the volume-weighted market-wide price via usage of multiple premium data aggregators. Unlike DEX-based price oracles, Chainlink ensures the manipulation of a single exchange has no effect over the pricing data being delivered to the Warp Finance protocol.
Connecting Warp Finance to High-Quality Oracles That Provide Broad Market Coverage
As a protocol pushing the boundaries of the DeFi ecosystem, we want to assure users that the security of user deposits is our highest priority. Hence, before relaunching the Warp Finance protocol, we set out to integrate a blockchain oracle that would not only prevent the previous oracle issues we experienced, but prevent any potential future oracle-related issues that could occur.
It is with this security-first mindset that we identified Chainlink as the oracle solution that provides the highest quality price data delivered by a network of robust oracles nodes that have proven to operate successfully even during extreme blockchain network congestion and unexpected hardforks like the recent Infura downtime event. By showcasing resilience during extreme situations, Chainlink Price Feeds demonstrate why they are consistently selected by the DeFi ecosystem to operate mission critical infrastructure that secure billions of dollars in user funds as the most widely used price oracle solution.
Chainlink Price Feeds achieve this extreme level of reliability by employing a defense-in-depth approach via decentralization at various layers, such as using multiple node operators and data sources to ensure there is no single point of failure in the delivery of data on-chain or single source of truth to manipulate. Data about the operation of the Chainlink Price Feeds are also made transparent through visualizations and independent data analytics sites, both of which are derived using immutable and tamper-proof on-chain data regarding the performance of both the oracle network as a whole and each individual node.
Chainlink oracle nodes used in-production to generate Price Feeds are also security-reviewed and operated by professional DevOps teams who have extensive experience in securing mission critical infrastructure worth billions of dollars in value. This provides strong Sybil-resistance and a heightened level of transparency into the entities delivering data on-chain. Each node operator connects to multiple premium data aggregators (e.g. Brave New Coin and Amberdata) who track and aggregate data from hundreds of exchanges, while also smoothing outliers, accounting for volume shifts, and consistently maintaining their price data so it reflects market-wide price discovery in real-time, even during adverse market conditions.
Integrating Chainlink oracles into the Warp Finance ecosystem will ensure the protocol is continuously protected against data manipulation attacks on one or even a few exchanges. Additionally, through the usage of a price reference model, price updates are asynchronous while queries remain synchronous, meaning the Warp Finance protocol can receive the market price at any time, while flash loans have no effect over the data being consumed.
Protecting the DeFi Ecosystem Through Chainlink Oracles
Working with top tier security experts and the Chainlink team alike has directly empowered us to secure Warp Finance and soon safely relaunch the protocol with a rehauled security infrastructure and new audit. We will continue to work with the Chainlink Network to ensure this integration is as successful as possible and plan to use their oracle solution for future DeFi products within the Warp Finance ecosystem.
We anticipate that our ability to integrate with several other LP token providers will now be fostered by our integration with Chainlink, allowing for our mission of providing second-order liquidity to the DeFi ecosystem to be realized.
About Warp Finance
The Warp Protocol’s primary objective is to create a novel use case for unused Liquidity Provider (LP) tokens by allowing them to be used as collateral for borrowing.
In the DeFi space, providing second-order liquidity is crucial for the growth of the market. On Uniswap alone, there is currently $1.79 billion locked in LP tokens and our platform allows LPs to increase the capital efficiency of their liquidity or even modify their exposure. Warp Finance plans to release additional use cases of second-order liquidity in the DeFi space.
If you’re a developer and want to quickly get your application connected to Chainlink Price Reference Data, visit the developer documentation and join the technical discussion in Discord. If you want to schedule a call to discuss the integration more in-depth, reach out here.
Chainlink is a general-purpose framework for building and running decentralized oracle networks that give your smart contract access to secure and reliable data inputs and outputs. Use Chainlink to connect to data providers, web APIs, enterprise systems, cloud providers, IoT devices, payment systems, other blockchains, and much more.