Decentralized lending protocol Compound has paused the provision of 4 tokens as lending collateral on its platform, aiming to guard customers in opposition to potential assaults involving worth manipulation, just like the current $117 million exploit of Mango Markets, based on a proposal on Compound’s governance discussion board that was lately handed.
With the pause, customers won’t be able to deposit Yearn.finance’s YFI (YFI), 0x’s ZRX, Fundamental Consideration Token (BAT) and Maker’s MKR (MKR) as collateral to take loans.
The proposal handed on Oct. 25 with 99% of all voters in favor. It acknowledged:
“An oracle manipulation-based assault analogous to the one which price Mango Markets $117m is way much less more likely to happen on Compound as a consequence of collateral belongings having a lot deeper liquidity than MNGO and Compound requiring loans to be over-collateralized. Nonetheless, out of an abundance of warning, we suggest pausing provide for the above belongings, given their relative liquidity profiles.”
In a safety evaluate of Compound v2 carried out in September, the Volt Protocol crew identified potential market manipulation dangers associated to low-liquidity tokens. The report defined:
“The assault is feasible when the quantity of a token borrowable on markets like Aave and Compound is massive in comparison with the liquid market. Essentially the most notable instance is ZRX, which has borrowable liquidity on every of those markets similar to or better than the standard each day quantity throughout all centralized and decentralized exchanges.”
On Twitter, Robert Leshner, founding father of Compound, defined that the conservative strategy wouldn’t impression present customers.
Following the @mangomarkets exploit, @gauntletnetwork has proposed disabling new provide for probably the most thinly traded collateral.
This conservative strategy will not impression present customers, and encourages the migration of utilization to Compound III (which is immune to the assault vector). https://t.co/yMQDgRXru7
— Robert Leshner (@rleshner) October 21, 2022
On Oct. 11, Avraham Eisenberg, the hacker behind the Mango Markets exploit, manipulated the worth of a posted collateral — the platforms’ native token, MNGO — to larger costs, then took out important loans in opposition to the inflated collateral, which drained Mango’s treasury.
The exploiter, self-described as a digital artwork supplier on Twitter, claimed that he and a crew of hackers undertook a “extremely worthwhile buying and selling technique” and that it was “authorized open market actions, utilizing the protocol as designed.”
After a proposal within the Mango’s governance discussion board was accepted, Eisenberg was allowed to maintain $47 million as a “bug bounty” whereas $67 million was despatched again to the treasury.
