Compound pauses the supply of ZRX, BAT, MKR, and YFI.
Decentralized finance (DeFi) application Compound has suspended the supply of four compound assets to avoid price manipulation.
According to the Governance proposal, Compound will pause the supply of 0x (ZRX), Basic Attention Token (BAT), Maker (MKR), and Yearn Finance (YFI) on the protocol’s latest version, Compound v3.
Did you know?
Subscribe - We publish new crypto explainer videos every week!
NEAR Protocol Explained: Beginner's Guide to NEAR (Animated)
The proposal asked to pause lending assets with low liquidity was passed on October 25th, with 96% of addresses voting in favor of the proposition. The motivation under such a proposal reads:
An oracle manipulation-based attack analogous to the one that cost Mango Markets $117m is much less likely to occur on Compound due to collateral assets having much deeper liquidity than MNGO and Compound requiring loans to be over-collateralized. However, out of an abundance of caution, we propose pausing supply for the above assets, given their relative liquidity profiles.
On October 11th, the new hack shook the crypto community when a Solana-based trading platform, Mango Markets, was exploited for over $100 million. The hackers have reportedly been “able to drain funds from Mango via an oracle price manipulation.” The hackers have drained Mango’s treasury using BTC (sollet), USDT, SOL, mSOL, USDC, and MNGO.
When asked about the exploit during the Unchained Podcast, Compound founder Robert Leshner highlighted that after Mango exploit, every protocol should review its risk parameters. Moreover, the founder added that this exploit should be a “wake-up call” for all lending protocols, including Compound Finance.
Every protocol has to address the risk parameters assuming that some black hat hacker is going to try to exploit it. It’s a great wake-up call for every DeFi project on every single blockchain to take this as a wake-up call.
Therefore, it is not a surprise that Compound started to take action to avoid price manipulations. The Compound Governance voting revealed that Robert Leshner was one of the main voters in Proposal-131.
At the time of writing, ZRX retails for $0.2592, recording a 5.42% growth in the last 24 hours. BAT’s price has grown by 4.50%, retailing for $0.2915. MKR and YFI retail for $971.66 and $8,182.82, respectively.
