- Compound has halted the ability to use four coins as collateral, fearing a Mango Markets-style attack
- The Compound DAO voted 554,125-1 in favour of the action
- YFI, ZRX, BAT and MKR have all been suspended as forms of collateral
Decentralised lending platform Compound has halted the ability to use four tokens as lending collateral following the recent exploitation of Mango Markets. A recent DAO vote approved the measure, which will see YFI, ZRX, BAT and MKR all prevented from being used as collateral as the project aims to protect users against potential attacks involving price manipulation. Mango Markets was recently hit with a $100 million+ exploit of its services, and Compound DAO members are clearly concerned enough about the security of their own platform to take action.
Compound Investigation Began in September
Compound’s action on this front actually dates back to September 2nd when a proposal was put to the DAO to ‘Investigate Market Manipulation Risk in ZRX and Other Tokens’. This was not taken forward to any great extent, but the attack vector raised its head later that month when a GMX oracle attack, which involved the same style of manipulation of exchange prices, urged one DAO member to suggest that “perhaps there is interest in revisiting this topic.”
When the exact same style of attack was used against Mango Markets two weeks ago, the DAO members realised they had to act. An investigation revealed that four coins were susceptible to such practices, YFI, ZRX, BAT and MKR, and yesterday the DAO was asked to vote on whether these coins should be temporarily suspended from use as collateral.
The result was overwhelming, with 554,125 to 1 in favour of the action.
Issue Will Push v3 Upgrade
The DAO reported that the market manipulation issue central to the vote will be “a step towards incentivizing migration from Compound V2 to Compound V3” which the community has been calling for in recent months. According to Compound, this upgrade has “meaningfully more risk controls, including supply caps” to help prevent the kind of attacks being seen more and more in the DeFi world of late.
