Skip to main content

Compound Finance to impose lending caps in light of failed Aave exploit

Some illiquid altcoins will have their borrow limit reduced by upwards of 99%.

On Nov. 28, users of decentralized finance, or DeFi, lending platform Compound Finance passed a proposal to impose restrictions on the maximum borrowing of 10 tokens on the protocol. The proposal was put forth by financial modeling firm Gauntlet and passed with a majority "Yes," although total turnout amounted to less than 7% of the COMP tokens in circulation. 

Most notably, tokens such as Uniswap (UNI) and COMP had their borrow limits slashed from 11,250,000 and 150,000 to 550,000 and 18,000, respectively. Other less liquid altcoins on Compound, such as year.finance (YFI), had its borrow cap reduced from 1,500 to just 20. Coins such as wrapped Bitcoin (WBTC), which previously had no borrow limit on Compound, have been slapped with a ceiling of 1,250 on maximum borrow.

According to Gauntlet, the proposal would prevent "insolvency risk from liquidation cascades," "price manipulation Mango squeeze exploits," "risk of high utilization," and "risk from shorting assets from a short position on Compound of significant size relative to the circulating supply of the asset." Although the related incident was not directly referenced, Gauntlet also conducted modeling and risk assessment for DeFi lending protocol Aave. 

On Nov. 22, it was uncovered that Mango Markets hacker Avraham Eisenberg attempted to exploit the protocol by shorting high amounts of Curve (CRV), which was an illiquid token on Aave at the time, and forcing the protocol to liquidate the position at a loss due to significant slippage. However, it turned out that the slippage was far less than expected, resulting in an estimated $10 million loss after a CRV short squeeze.

Gauntlet then proposed to freeze a series of tokens on Aave V2 that may be at risk of an exploit due to lack of liquidity. Currently, the Compound Finance protocol has $654.7 million in total borrowings collateralized by $2.146 billion worth of assets. 



from https://ift.tt/TA0UOej
https://ift.tt/oFlcshC
Labels:

Comments

Post a Comment

Any questions, Please.

Popular posts from this blog

Five Bitcoin Price Charts Analyzing The Dramatic Q1 2022 Conclusion

There are only hours remaining until the Q1 2022 close in Bitcoin price action. With the important quarterly candle set to close tonight, let’s look at what technicals might say about the direction of the next quarter. Q1 2022 Comes To A Close For Bitcoin The first quarter of a year, often sets the tone for the year to come. In investments, a poor Q1 performance is indicative of a bad year ahead. Considering the fact that Bitcoin price is now above $45,000 after touching $32,000 this quarter, it is tough to say the performance has been “poor” by anything other than crypto standards. Related Reading | Bitcoin Weekly Momentum Flips Bullish For First Time In 2022 The cryptocurrency has recovered nearly 40% from the low, leaving a long wick behind. Such a long wick suggests that before the quarter came to a close, buyers stepped up in a major way. Buyers were able to step up in a larger capacity in Q1 2022 than bears were able to in the final quarter of last year. The bearish wick to cl...
Post a Comment
Read more

FTX hacker reportedly transfers a portion of stolen funds to OKX after using Bitcoin mixer

On-chain activity suggests that the hacker has sent at least 225 BTC (4.5 million) to OKX so far. Hackers who drained FTX and FTX USA of over $450 million worth of assets just moments after the doomed crypto exchange filed for bankruptcy on Nov. 11, continue to move assets around in an attempt to launder the money.  A crypto analyst who goes by ZachXBT on Twitter alleged that the FTX hackers have transferred a portion of the stolen funds to the OKX exchange, after using the Bitcoin mixer ChipMixer. The analyst reported that at least 225 BTC — worth $4.1 million USD — has been sent to OKX so far.  1/ Myself and @bax1337 spent this past weekend looking into the FTX attacker’s deposits to ChipMixer. It appears they’ve likely been transferring a portion of the stolen FTX funds to OKX after withdrawing from CM So far we’ve accounted for at least $4.1m (255 BTC) sent to OKX pic.twitter.com/C46JZWtktn — ZachXBT (@zachxbt) November 29, 2022 According to ZachXBT, the FTX h...
Post a Comment
Read more

2 metrics signal the $1T crypto market cap support likely won’t hold

Despite the 8.5% weekly rally in cryptocurrencies, the lack of stablecoin premiums in Asia and futures markets activity shows buyers’ lack of confidence. Cryptocurrencies broke the $1 trillion market capitalization resistance on Oct. 26, which had been holding strong for the previous 41 days. Despite Bitcoin’s ( BTC ) modest 5.5% weekly gains, the aggregate value of 20,000 listed tokens increased by 8.5% between Oct. 24 and 31. Total crypto market cap, USD (in billions). Source: TradingView The cryptocurrency market was positively impacted by a 6.3% weekly rally in the Russell 2000 mid-capitalization stock market index. Some encouraging news accompanied the positive tailwinds from traditional markets. For instance,  55,000 BTC was withdrawn from Binance on Oct. 26, a record high. Typically, analysts consider the reduced number of coins deposited on exchanges a bullish indicator, as the immediate selling pressure eases. Moreover, exchange and wallet provider Blockchain.com ...
Post a Comment
Read more