Compound temporarily freezes cETH operations due to protocol update error

The lending protocol Compound halted lending and the withdrawal of collateral for cETH tokens after the discovery of an error in the activated Proposal 117. The proposal updated the price feeds for Compound v2.

An hour ago, Proposal 117 was executed, which updated the price feed that Compound v2 uses.

This price feed, while audited by three auditors, contained an error that is causing transactions for ETH suppliers and borrowers to revert.https://t.co/a2DFk7h0ET

— Compound Labs (@compoundfinance) August 30, 2022

The bug leads to the cancellation of transactions for ETH suppliers and borrowers. The code was audited by OpenZeppelin, Dedaub and ABDK.

Some users suggested that developers may have introduced the code after it had been reviewed by auditing firms.

The three auditors mentioned are @dedaub, ABDK and @OpenZeppelin. Their reports are dated 29th Nov 2021, 27th Dec 2021 and 1st April 2022, respectively.

The gov proposal is dated a week ago. I wonder if the code was frozen since April or it had undergone changes? https://t.co/5k2DvIJLzs

— axic.eth (@alexberegszaszi) August 30, 2022

The team said there are no risks to users’ funds. The protocol still allows adding collateral, including Ether. The interface will be unavailable for some time due to a “price discrepancy,” the developers warned.

All users should still be able to add collateral, even Ether collateral.

The interface is currently not loading, due to this price discrepancy, but will be operational again shortly.

— Compound Labs (@compoundfinance) August 30, 2022

Proposal 117 proposed by GFX Labs on behalf of Chainlink to update price feed oracle contracts from version 2 to version 3 Uniswap.

The main issue is a temporary outage of the cETH market, which will be addressed by a new governance proposal. At present, no funds are at risk. The other cToken markets on Compound V2 and all V3 markets remain functional, OpenZeppelin explained.

Read the following post for details on a Compound incident we are working to resolve for the cETH market. A fix is already underway and no funds are at risk at this time. The rest of the cToken markets on Compound V2 and all of V3 remain functional.https://t.co/CiSE3a99Wa

— OpenZeppelin (@OpenZeppelin) August 30, 2022

An hour after the incident, GFX Labs proposed Proposal 119 to revoke Proposal 117. It will take effect seven days after adoption, in accordance with the governance process.

Polygon’s head of information security, Mudit Gupta, expressed disappointment with the prolonged lock.

This is the second time in the last few months that Compound has been ‘rekt’ for seven days. Temporary blocks are not always good. Stop using them so bluntly, — he said.

This is the second time in last few months that compound has been rekt because their governance has a 7 day timelock.

I don’t know who needs to hear this but timelocks are not always good. They have tradeoffs.

Stop blindly shilling timelocks. Thanks.

— Mudit Gupta (@Mudit__Gupta) August 31, 2022

Update issues did not significantly affect the project’s governance token. In the last 24 hours, Compound fell 1.7% amid mixed moves in DeFi assets, according to CoinGecko.

In September 2021, the project suffered multi-million losses due to an error in the protocol update.

Read ForkLog’s bitcoin news on our Telegram — cryptocurrency news, rates and analysis.