A hot potato: Proponents of decentralized finance love to tout the cost, speed, privacy, and security benefits compared to the traditional banking system, but it's still in the early days for this new concept. Compound, the world's fifth-largest decentralized finance protocol with a total value of $10.3 billion, experienced a smart contract glitch that resulted in a fund loss totaling $162 million.
Last week, a decentralized finance (DeFi) platform called Compound Labs accidentally gave away no less than $162 million worth of its COMP token. As expected, this made many account owners happy about the windfall, but the CEO is asking them to return the funds voluntarily.
When learning of the issue on Friday, Compound Labs founder and CEO Robert Leshner was told that a bug in an update to the comptroller contract—used to distribute COMP tokens to customers—caused $92.6 million worth of COMP to be distributed to users. Coincidentally, the figure represents the hard cap for how many COMP tokens could be accidentally distributed (280,000 tokens).
On Sunday morning, Compound had replenished the pool to 202,472.5 COMP tokens using reserved funds worth $66.9 million. Initially, Leshner asked the people that received more coins than they should have to keep 10 percent and return the rest, or else their windfall be reported to the IRS as income to pressure them into paying taxes on it. He has since apologized for the threatening tone of his request, but it did leave a stain on the public image of what is purportedly a decentralized finance platform.
The blunder will go down in history as the largest-ever fund loss that has happened as a result of a smart contract incident. Most investors don't seem to be worried, however, and at least 162,505 COMP tokens worth $51.1 million have been returned as of this writing.
Financial policy analyst and cryptocurrency critic Andrew Park told Bloomberg that incidents such as this aren't a good look for decentralized finance projects. Park notes, "there are reasons to criticize the existing banking system, but there are a lot of safeguards in place to prevent these kinds of things from happening."
In related news, El Salvador's whole-hearted embrace of Bitcoin continues with an ambitious volcano-powered Bitcoin mining project that has already mined its first Satoshis, which are tiny fractions of a Bitcoin.
https://www.techspot.com/news/91567-bug-compound-defi-platform-caused-giveaway-162-million.html
