An upgrade to the Compound cETH Market was made as a result of a governance proposal to change the pricing feed, and this has effectively bricked the market. The decentralized lending program is now impacted by this change.
The Compound ETH (cETH) market has been “temporarily paused” due to a code error, which has resulted in cETH transactions reversing. Despite this, Compound Labs has stated that “funds are not immediately at danger” despite the front end being down.
On August 31st, Compound Labs announced that the Compound protocol’s oracle contracts had been upgraded to a new version that uses Uniswap V3 instead of V2 for price feeds, a change that had been implemented just hours before.
The latest upgrade has broken the Compound cETH Market, and there is a long queue of people waiting for someone to fix it.
In response to the brief pause in the cETH market, Compound Labs announced its intention to revert to the previous pricing feed via Proposal 119: Oracle Update. Despite being drafted less than an hour following Proposal 117’s execution, the new proposal must now go through a governance procedure that will take seven days to complete.
The “getUnderlyingPrice” method did not update the price of cETH tokens, leading to empty bytes and the call being reversed, as reported in an update by OpenZeppelin Security Solutions Architect Michael Lewellen.
No money is at risk, according to Lewellen’s additional comments:
New governance plan will fix the core problem, which is a temporary denial of service for the cETH market. At the present time, no money is in danger of being lost. Every other cToken market on Compound V2 and all of V3 are still operational.
But Lewellen did say that
In the event that the fix proposal takes place and the price of ETH has dropped significantly, users who deposited ETH and obtained cETH to initiate borrow positions may be required to promptly liquidate their positions.
However, Compound Labs CEO Robert Leshner says that clients can still avoid liquidation by settling debt and providing collateral.
Though the Oracle contract was audited by three separate smart contract auditing businesses, including OpenZeppelin and ChainSecurity, the most current groups to analyze Compound’s smart contracts, Compound Labs revealed that the code fault still happened.
All 696,665 votes from 245 unique wallet addresses were in favor of Proposal 117, therefore the price feed upgrade appears to have been well supported. In favor of the proposal were 306,146 votes, and the winner was Polychain Capital, an investment firm specializing in cryptocurrencies.
DeFi Llama ranks Compound as the third-largest decentralized lending network, with a market cap of $2.67 billion (TVL). COMP, the token of Compound, is currently trading at $48.27, unaffected by the news.