Massive Glitch On DeFi Platform Compound Puts $160 Million Up For Grabs

Massive Glitch On DeFi Platform Compound Puts $160 Million Up For Grabs

An upgrade gone wrong to the decentralized finance protocol Compound Finance COMP/USD has led to a bigger loss.

What Happened: According to Compound Labs' founder and Chief Executive Officer Robert Leshner, 490,000 Comp worth around $160 million is at risk. 

After a glitch in the DeFi lending platform Compound last week, about $90 million in tokens were sent out to users of DeFi protocol Compound by mistake.

After the deployment of Proposal 62, a glitch occurred, accidentally sending money from a pool of cash called Comptroller.

On Sunday, users started taking advantage of the glitch and sending Compound's cryptocurrency to Comptroller.

On Sunday, Leshner tweeted, "Going forward, I'm optimistic about the patches making their way through the governance process, which fix the distribution, and the community members that are working to manage this bug."

According to the blockchain data page Etherscan, there was major activity in the Comptroller pool on Sunday night. There was movement of money in and out of the system. There was $43.4 million in the pool as of Monday.

Comp was down 3.64% to $319.42 Monday afternoon.

Why It Matters: Unlike platforms like BlockFi, Compound is operated by a distributed network of users utilizing smart contracts or predetermined software programs.

With this, the risk of distribution increases, and neither Compound Labs nor anyone else can pause the distribution of the tokens.

After last week's mishap, Compound tried to put up patches to fix the issue. Due to government regulations, any changes take seven days to go through the system.

Looking at the vulnerability, Leshner had said, "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." 

Photo: Unsplash.

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