DeFi Protocol’s Botched Upgrade Sends $90 Million to Users – CEO Begs for Return of Money
Decentralized finance (DeFi) lending protocol Compound mistakenly sent $90 million to users, following a code error in an upgrade. Now, the founder is begging people to return the money.
“If you received a large, incorrect amount of COMP from the Compound protocol error: Please return it to the Compound Timelock (0x6d903f6003cca6255D85CcA4D3B5E5146dC33925). Keep 10% as a white-hat. Otherwise, it’s being reported as income to the IRS, and most of you are doxed,” CEO Robert Leshner tweeted yesterday.
A couple of hours later and following several harsh replies to his initial tweet, Leshner tweeted:
“I’m trying to do anything I can to help the community get some of its COMP back, and this was a bone-headed tweet / approach. That’s on me. Luckily, the community is much bigger, and smarter, than just me. I appreciate your ridicule and support.”
Compound is the world’s fifth-largest decentralized finance protocol, with more than $9 billion value locked, MarketWatch reports, citing data from DeFi Pulse. Like many other DeFi platforms, Compound rewards some users with its tokens for using the platform and providing liquidity, as an incentive.
According to its website, the company is on a mission to change the legacy financial system which “is slow, inefficient, and constrained by intermediaries.”
CNBC reports that the price of Compound’s native token, COMP, initially plunged nearly 13% in a day on news of the bug, but it’s since gained back ground.
Other DeFi protocols ran into similar issues, including Alchemix a few months ago, losing $4.8 billion, according to CNBC.
Daniel Giles Helm, Developer Relations at Skynet Labs, tells GOBankingRates that, although the dollar amount seems shocking, it’s important to remember that no one’s base assets were compromised.
“There’s been some price shock reacting to the dilution effect of leaking that many COMP tokens, but the team and community’s quick response should remind us what makes crypto so exciting. DeFi has seen projects like Alchemix recover over 50% of lost funds just because of the goodwill of their community, and Compound has plenty of goodwill as an early innovator in the space,” he added.
Compound’s bug was due to an upgrade earlier this week.
“A few hours ago, Proposal 62 went into effect, updating the Comptroller contract, which distributes COMP to users of the protocol. The new Comptroller contract contains a bug, causing some users to receive far too much COMP,” Leshner tweeted at the time.
“All supplied assets, borrowed assets, and positions are completely unaffected. Users don’t have to worry about their funds; the only risk is that you (or another user) receives an unfairly large quantity of COMP,” he added.