Wrap Finance faced some uncomfortable moments in 2020 as hackers used the vulnerability of flash loan to steal stablecoins stored in the DeFi protocol. The DeFi space is getting larger, based on new investors coming in and putting several billions of dollars worth of investment sealed in the protocols.
The technology’s gradual success makes it attract bad players in the industry who are ready to steal investors’ monies in an untraceable manner. The decentralized financial system has its advantages, as it gives anonymity and makes efficient use of time. Unfortunately, the platform’s secrecy helps criminals indulge in illegal acts without getting caught.
2020’s flash loan attacks against Wrap Finance
The protocol, which promises to give a safe and secured environment for digital assets, became a victim of the flash loan attacks in late 2020. Before late last year’s episode, the company faced other flash loan attacks where it lost a lot of money.
Flash loan attacks are loans given immediately, making the collateral part of the service a source of concern. The hacker explored the protocol’s flaws to get loans worth more than the collateral given. The incident resulted in the company losing almost $8 million to the criminals over the incident.
The company shared via its Twitter handle on December 12 how the firm suffered a complex loan attack, leading to the loss of stablecoins from the protocol. The company noted that the exploiters made way with $7.7 million worth of stablecoins but will try to recover some still in the collateral vault, which is worth $5.5 million.
It eventually regained most of the stolen money and gave it to the lenders based on its claims. Ever since then, Wrap Finance took security more seriously and consulted several experts to ensure an incident like that never happens again, in a bid to get the protocol back on track since its unexpected pause since the incident.
Chainlink to ensure protocol’s relaunch
Since the flash loan attacks, the company took up a partnership with Chainlink by using its price feed to safely relaunch without any more threats to people’s monies’ safety. The firm pointed out some possible causes of the flash loan attacks and partnered with Chainlink to use its Oracle technology to promise security to the digital assets.
The company said that based on its research to find a solution to its security problems, it found Chainlink, which it finds secure and reliable in terms of Oracle solution, which will stop flash loans from taking place on the platform.
Still, on the security aspect, the protocol recognized’s work during the earlier years of the blockchain technology and proved secured services despite the uncertainty during those periods. Again, the protocol explained that Chainlink’s access to high-quality data makes it secure and safe for those who use the solution. Wrap Finance is convinced that it will longer face flash loans that steal money from investors with the oracle solution on its side because it has undergone several projects successfully.