After successfully launching Compound III a few days ago, the decentralized lending platform has been affected by a minor code bug after a recent proposal was executed on Aug 30th.
Compound is the second biggest money market according to DeFiLlama, right behind AAVE. It was launched in September 2018 and its TVL currently sits at $2.7b, the protocol TVL hitting $12b at all-time high.
The code bug came from Proposal 117, which implied upgrading the protocol’s oracle contract to a new version that uses price feeds from Uniswap V3 instead of V2.
Compound Labs claims that the contract was looked over by three auditors. Despite that, it contains an error that is causing transactions for ETH lenders and borrowers to revert. Meaning that the cETH market is basically frozen until the error is solved.
cETH is a yield-bearing token that’s used for yield farming. Those who lend their assets on Compound get cAssets in return.
Less than an hour after Proposal 117 was executed, Compound Labs released a new proposal that aims to fix this problem. However, the governance process takes 7 days before a proposal is accepted.
Luckily, Compound Labs claimed that the users’ funds aren’t at risk, so users only have to wait 7 days until this bug will finally be fixed in order to get their funds back.
The team of one of the code auditors, OpenZeppelin, stated that cETH tokens remain functional. According to their declarations, Compound users still have to manage their positions carefully and eventually add collateral in case the $ETH price drops significantly.
Otherwise, their positions will be instantly liquidated after the new proposal is executed.
OpenZeppelin insured that they’ll continue to work with the Compound community and a post-mortem will be released after the situation is resolved.