- A bug in the Compound code has put some $150 million worth of COMP tokens at risk
- An error, caused by a single word being incorrectly used, has led to users being handed out huge windfalls
- The protocol has a 7-day governance procedure for upgrades
Compound faces a $150 million token writedown following a bug in the code of an upgrade of the DeFi lending platform. The code, which contained a single word out of place, has meant that tens of millions of dollars’ worth of COMP tokens have been fired out to users, with more to follow as the protocol has a 7-day protocol implementation process. The fate of the accidentally sent tokens is yet to be decided, and it may be up to the conscience of each user as to what goes back and what doesn’t.
Compound Upgrade Contained Critical Error
Compound’s woes began on September 30 when its newly implemented Proposal 062 began over-rewarding suppliers by tens of millions of dollars due to a token distribution bug. Proposal 062 was implemented to split COMP rewards distribution and, ironically, introduce some other bug fixes. The update rolled out having passed all tests but within hours the team stated that it was investigating “discrepancies in the COMP distribution.”
The upshot of this was a huge windfall for some Compound users, with one reporting a deposit of 70 million COMP tokens. The error in the code was soon spotted and was revealed to have been akin to a “reverse rug pull” with past suppliers of certain coins erroneously awarded the bounties.
7-day Protocol Upgrade Could Cost $65 Million
Having been quickly identified it should have been an equally quick fix, but Compound stipulates a 7-day governance process for new proposals, meaning that the fix, which is simply a change of one word in the codes, won’t go into effect until October 7. Until this time, the faulty algorithm will be spewing out COMP tokens to those who contribute to the right pools, rather like a cash machine giving out money. The entire situation could end up costing Compound (not its user) almost $150 million in COMP tokens.
There has been no word yet as to what Compound plans to do about the mistakenly-issued funds, but with the amount that has been lost some kind of recall must be planned. Whether it actually comes back however is another matter entirely…