Compound Reports Bug that Froze cETH Borrowing and Lending Markets for 7 Days
Compound Finance executed a proposal to update its price feed but the move resulted in a code error “that is causing transactions for cETH suppliers and borrowers to revert.” The protocol submitted a new proposal to bring back the previous version of the price feeds but the process will take seven days, during which cETH borrowing and lending markets will be frozen.
No Funds at Risk, Says Compound Founder
Interest rate protocol Compound Finance reported a code bug that has frozen the Compound Ether (cETH) borrowing and lending markets for seven days. The bug emerged when Compound executed Proposal 117 to update its price feeds.
“No funds seem immediately at risk. It will likely be seven days until cETH is functioning normally. There will potentially be more governance proposals to rectify the situation.”– Robert Leshner, founder of Compound Labs
The error is preventing users from borrowing or withdrawing collateral but they will still be able to settle debt and “add collateral, even Ether collateral,” Compound wrote on Twitter. The bug also caused the interface to stop working but the protocol expects it to become operational again shortly.
Compound Labs has created a new proposal to revert to the previous price feed, but the proposal must undertake a 7-day governance process before coming into effect. The protocol said the code error came even though the oracle contract was reviewed by three separate smart contract audit firms, including OpenZeppelin and ChainSecurity.
OpenZeppelin’s Security Solutions Architect Michael Lewellen said the bug originated from the “getUnderlyingPrice” function, which failed to update the price feed. Lewellen confirmed no funds are at risk at the moment and that “the rest of the cToken markets on Compound V2 and all of V3 will remain functional.”
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Code Error Adds to Compound’s 2022 Woes
The new bug marks another challenge for Compound this year, which has struggled amid the broader crypto market downturn. Earlier this year, Compound’s Q1 2022 report showed that liquidations on the interest rate protocol soared by 295% during the three-month period.
Such a sharp increase in liquidated positions comes as investors rotated away from crypto due to sky-high inflation and the Fed’s aggressive monetary policy tightening. These headwinds have put severe pressure on the crypto market, which has lost more than a trillion dollars in value in recent months.
Earlier this week, the world’s largest cryptocurrency Bitcoin dropped below the $20,000 mark following Fed Chair Jerome Powell’s speech at the Jackson Hole annual conference last week. The U.S. central bank leader reiterated his commitment to continue fighting inflation through more interest rate hikes.
Do you think the worst of the ‘crypto winter’ is behind us? Let us know in the comments below.