A new upgrade on the DeFi protocol Compound Finance has led to losses of $80 million! What exactly has happened?
After Proposal 62 was deployed, which had the role of splitting COMP reward distribution and fix bugs, Compound Finance encountered some unexpected activity.
“No supplied/borrowed funds are at risk — Compound Labs and members of the community are investigating discrepancies in the COMP distribution.”
Not long after, several Compound users declared that they had woken up to find 70 million COMP tokens, worth about $20 million, in their wallets.
Robert Leshner, the founder of Compound, revealed that “The new Comptroller contract contains a bug, causing some users to receive far too much COMP. There are no admin controls or community tools to disable the COMP distribution; any changes to the protocol require a 7-day governance process to make their way into production.”
Mudit Gupta, a blockchain security researcher called the moment a “reverse rug pull,” adding “a small change at one place can introduce vulnerability at another.”
As expected, the price of COMP fell by 12%, reaching $285 after the news.