Compound Labs had to suspend its cETH market for a week after a bug was introduced during its latest upgrade.
Upgrade Bug Freezes Millions
Compound Labs announced the suspension of its Compound Ether (cETH) market after the bug caused an issue with the price feed. The bug, which was in a recent upgrade, caused transactions for ETH suppliers and borrowers to revert. As a result, the Compound Labs team had to freeze the cETH market temporarily to address the issue and initiate damage control. An hour after the upgrade was executed, Compound made a statement announcing the issue, claiming that funds were not immediately at risk and acknowledged that it was a developing situation. The platform’s cETH market is around $830 million strong and has been rendered unusable till the matter is fixed.
The upgrade which created the bug, i.e., Proposal 117, was focused on setting a new price oracle, by switching the anchor market from Uniswap v2 to v3. Compound’s decentralized governance system depends on COMP token holders voting on a proposal for any changes. The users are then compensated with two different interest-bearing cTokens, CEther and CErc20, due to the differences between ETH and other ERC-20 tokens on Ethereum. The bug was created in a price calculator in the Proposal 117 upgrade when the code assumed all that all cTokens functioned as CErc20 and resulted in reverted transactions.
The matter is being addressed by developing a new proposal, 119, which will revert the smart contract back to the previous price feed. Since the update will take seven days to be fully implemented, the cETH market will stay frozen for the next week. However, the team has stated that users should still be able to add collateral, including Ether. Therefore users with outstanding debt would be able to deposit ETH to avoid liquidation.
Slow Governance Causing Losses
Compound’s slow-moving governance has been a long-standing problem, losing the protocol millions of dollars, especially when it comes to addressing live bugs. Every proposed change will first face a two-day review period, following which voting will start. The voting continues for three days, and if successful, the proposal then passes into a two-day “timelock” queue, where it goes through last minute checks. This is why Proposal 119 will take at least a week to be implemented. It is to be noted that there is a possibility that it can take longer in case it is canceled if last-minute errors are discovered.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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