Bug in Compound Finance's new update risks distributing $80 million in unearned rewards

Whilst billions of {dollars} have been poured into the DeFi area over the previous yr, the business continues to be plagued with common exploits and hacks. Most just lately, considered one of DeFi’s greatest lending and borrowing protocols, Compound Finance, fell sufferer to a bug that would doubtlessly value the corporate tens of millions of {dollars}.

The rate of interest protocol just lately launched an replace that led “some customers to obtain far an excessive amount of COMP” tokens in unearned rewards. Compound Labs, the group behind the Compound protocol, tweeted concerning the incident earlier, stating,

“Uncommon exercise has been reported relating to the distribution of COMP following the execution of Proposal 062. No provided/borrowed funds are in danger — Compound Labs and members of the group are investigating discrepancies within the COMP distribution.”

Later, the protocol’s founder, Robert Leshner, tweeted out a proof stating that the newly launched Proposal 62 which up to date the Comptroller contract, tasked with distributing COMP to customers of the protocol, contained a bug that precipitated this challenge.

The replace’s objective was to separate the COMP distribution to debtors and liquidity suppliers primarily based on governance-set ratios quite than the 50/50 mannequin that was used beforehand, together with fixing minor bugs. Nonetheless, because the upgraded contract contained a bug, some customers have been in a position to declare round 168,000 COMP tokens already, which have been price virtually $50 million at press time.

Leshner additional revealed that “the influence is bounded, at worst, 280,000 COMP tokens,” which was price about $80 million on the time of writing. Whereas there are nonetheless hundreds of tokens left within the Comptroller, the protocol’s decentralized nature prevents the distribution contract from being modified with out governance interplay. He stated,

“There aren’t any admin controls or group instruments to disable the COMP distribution; any adjustments to the protocol require a 7-day governance course of to make their method into manufacturing. Labs, and members of the group, are evaluating potential steps to patch the COMP distribution.”

DeFi Llama developer “0xngmi,” who delved deeper into the problem, reported on Twitter that many of the defective rewards have been on the borrower facet, with one consumer taking their 10 million in COMP and dumping them on OKEX and Huobi for stablecoins.

He additionally said that the bug solely allowed individuals who had borrowed from the protocol earlier to assert these rewards, whereas these grasping sufficient to strive borrowing now to earn these rewards wouldn’t achieve success.

On the time of writing, COMP had misplaced over 11% of its valuation over the previous day and was priced at $300, presumably attributable to concern unfold by the bug.

DeFi protocols are weak to bugs due to hackers being able to leverage by even minor bugs within the codebase. Final month, one of many greatest DeFi hacks happened when a white hat hacker stole over $600 million from Poly Community. Whereas this protocol was fortunate sufficient to be returned their funds, pNetwork misplaced $12.7 million final week in an exploit that value them 277 Bitcoins.

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By Xnode24

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