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Saturday, January 29, 2022

DeFi Protocol Compound Finance Looks to Restore Confidence by Passing Repair Bug

Compound Finance (COMP), the fifth-largest DeFi pool, has applied Proposal 064 to fix a bug in the distribution mechanism that has been plaguing it for the past week.

Bug Takes Its Toll

The lending protocol had released Proposal 062 over that period, which caused a bug in the COMP distribution mechanism and lost it an estimated US$80 million in the process.

The protocol has since passed Proposal 064, titled “Fix COMP Accurial Bug”, that aims to “patch the bug introduced in Proposal 062 and pessimistically allow COMP reward withdrawals until the bad COMP accruals can be fixed”.

Voting by COMP community to pass Proposal 064.

But before the next patch could be applied, a malicious entity exploited the drip() functionality, transferring US$68.8m from the reservoir to the Comptroller, which increases the pool for incorrectly distributed COMP rewards, allowing the hacker to get away with some more COMP before the issue was resolved.

Long Governance Process Drags Out Fixing Time

Attempts to rectify the crisis were immediately instigated through Proposal 063, which took seven days to reach production due to the protocol’s governance procedure of reviewing, voting and time lock, which lasts seven days.

Proposal 063 by @Arr00c@tylerether and other community members “prevents further COMP from being distributed until the correct logic is restored, but causes issues for protocols that integrated with Compound and required the claim functionality”. Soon after, Proposal 064 followed:

Proposal 064 passed, and can be executed in two days:

1,037,107 COMP ✅
0 COMP ⛔️

For the majority of users, the COMP Distribution will return to normal after execution.

Certain users (that hit the 62 bug) will be unable to claim COMP until after a future patch.

— Compound Labs (@compoundfinance) October 7, 2021

No Rewards Until Issue Fully Resolved

Users who interacted with the cTUSD, cMKR, cSUSHI, cYFI, cAAVE, and cSAI markets while the bug was active will not be able to claim rewards from their entitled staked COMP tokens until after the issue is fully resolved.

The update also advised that “after this proposal passes, we’ll have a state where we’ll be able to compute an exhaustive list of users with bad COMP accrual values. From there, we’ll submit another proposal to fix the bad COMP accrual values and return everything to normal.”

Proposal 064 was expected to resolve Compound’s accrual issues by October 9 but the lost funds can only be reclaimed on an individual basis, meaning it’s a decision left to each user’s moral discretion whether or not to return the funds.

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BFIA Admin
The big boss.

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