On Nov. 28, customers of decentralized finance, or DeFi, lending platform Compound Finance handed a proposal to impose restrictions on the utmost borrowing of 10 tokens on the protocol. The proposal was put forth by monetary modeling agency Gauntlet and handed with a majority “Sure,” though complete turnout amounted to lower than 7% of the COMP tokens in circulation.
Most notably, tokens akin to Uniswap (UNI) and COMP had their borrow limits slashed from 11,250,000 and 150,000 to 550,000 and 18,000, respectively. Different much less liquid altcoins on Compound, akin to yr.finance (YFI), had its borrow cap decreased from 1,500 to simply 20. Cash akin to wrapped Bitcoin (WBTC), which beforehand had no borrow restrict on Compound, have been slapped with a ceiling of 1,250 on most borrow.
Proposal 135 has handed with quorum. ✅
Proposal 135 units borrow caps for ten Compound v2 markets.
The proposal will likely be utilized in two days. https://t.co/JvlEPJZrgp
— Compound Governance (@compgovernance) November 28, 2022
In line with Gauntlet, the proposal would stop “insolvency danger from liquidation cascades,” “worth manipulation Mango squeeze exploits,” “danger of excessive utilization,” and “danger from shorting property from a brief place on Compound of great dimension relative to the circulating provide of the asset.” Though the associated incident was in a roundabout way referenced, Gauntlet additionally carried out modeling and danger evaluation for DeFi lending protocol Aave.
On Nov. 22, it was uncovered that Mango Markets hacker Avraham Eisenberg tried to take advantage of the protocol by shorting excessive quantities of Curve (CRV), which was an illiquid token on Aave on the time, and forcing the protocol to liquidate the place at a loss as a result of important slippage. Nevertheless, it turned out that the slippage was far lower than anticipated, leading to an estimated $10 million loss after a CRV brief squeeze.
Gauntlet then proposed to freeze a collection of tokens on Aave V2 that could be prone to an exploit as a result of lack of liquidity. Presently, the Compound Finance protocol has $654.7 million in complete borrowings collateralized by $2.146 billion price of property.
