DeFi platform Compound gets back $14.5M in missing funds, thanks to ChangeNOW

Key Takeaways

• Cryptocurrency exchange platform ChangeNOW helped DeFi protocol Compound recoup $14.5M in lost funds
• A bug during an upgrade to the protocol’s Comptroller had sent out millions in cryptocurrency to random users
• The recovery became possible after a user created a 45,505 COMP transaction at ChangeNOW
• He later agreed to collaborate with ChangeNOW to return the funds to Compound

YEREVAN (CoinChapter.com) — In a dramatic turn of events, DeFi staking protocol Compound recovered a large chunk of funds accidentally sent out to users last week. 

Owing to close cooperation between crypto processing and exchange platform ChangeNOW and an unidentified user, Compound recouped around $14.5 million of the jeopardized COMP-USD.

COMP is the governance token of Compound Protocol in distribution since June 2020. It is an ERC-20 token issued on the Ethereum blockchain.

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How the DeFi goof-up unfolded

During the recent upgrade of the decentralized finance (DeFi) platform Compound, everything did not go as per plan. 

According to a Tweet put out by company CEO Robert Leshner, the updated Compound Comptroller contract contained a bug, causing some users to receive excessive amounts of free COMP.  

The Comptroller contract is responsible for distributing COMP to users of the protocol. It reportedly sent nearly $90-million-worth of cryptocurrency to users by mistake.

A few hours ago, Proposal 62 went into effect, updating the Comptroller contract, which distributes COMP to users of the protocol.

The new Comptroller contract contains a bug, causing some users to receive far too much COMP. https://t.co/Fy6nLgDqKy

— Robert Leshner (@rleshner) September 30, 2021

Before long, Leshner was out trying to salvage the funds and his company’s reputation.

“If you received a large, incorrect amount of COMP from the Compound protocol error: Please return it to the Compound Timelock,”

 Leshner, pleaded.

To make sure he doesn’t come across as desperate, which he obviously was, Leshner even threatened to report users who refuse to return the funds to the revenue services so they can be taxed. 

“Keep 10% as a white-hat. Otherwise, it’s being reported as income to the IRS, and most of you are doxxed,”

 he continued in his tweet.

Luckily for him, some users began sending back funds to the Timelock almost immediately. 

This brings the total COMP at risk to approximately 490k, of which 136k is still in the Comptroller, and 117k has been returned to the community so far (THANK YOU 🙏).

— Robert Leshner (@rleshner) October 3, 2021

The goof-up unfolded when users failed to identify the bug before approving the update to the DeFi platform. Since Compound is decentralized, the erroneous outrush of COMP could not be contained because Compound’s contracts do not allow anyone to make changes before a seven-day governance process.

While the developers put this feature to prevent unwarranted and frequent changes to the protocol, it became a hurdle as the developers could not stop the outflow of funds. It resulted in users having access to millions in cryptocurrency, left for grabs because of the bug.

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ChangeNOW comes to Compound’s rescue.

As Compound continued its efforts to regain the lost funds, the exchange platform ChangeNOW came to its rescue.

As reported by ChangeNOW, at the end of last week, the company’s risk management system noticed a 45505 COMP exchange attempt comprising of the lost COMP tokens. 

Their proprietory Anti-Money Laundering (AML) system flagged the transaction, kickstarting an investigation. 

Surprisingly, the user behind the transaction agreed with the idea that the COMP tokens be sent back Compound. 

Moreover, the unidentified user declined the 10% white hat reward offer by compound CEO Robert Leshner. As a result of his cooperation, ChangeNOW returned the full amount to Compound.

It did not skip Leshner’s attention as he took to Twitter to show his gratitude.

Thank you @ChangeNOW_io for returning 45,505 COMP to the community 🙏

— Robert Leshner (@rleshner) October 4, 2021

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The DeFi platform agrees to reward the user

In an exclusive conversation with CoinChapter, Mike Ermolaev, Head of PR at ChangeNOW stated, that the Compound CEO has been very appreciative of the help. Ermolaev also revealed that the user who played a part in salvaging the funds will be rewarded.

“Yes, we had a very nice conversation with Robert after all, he was very grateful for the cooperation. He suggested sending us an NFT he mentioned in his Twitter before, however we thought it would be fair to send the NFT to the user. So we contacted the user and are now waiting for their reply.”, . 

he said

To further incentivize beneficiaries to voluntarily send back the platform’s crypto tokens, Leshner had promised to gift a part of an assembling NFT to the first 5 users who will return them.

Anyone who returns COMP to the community is an alien giga-chad; and if a squad of alien giga-chads ever summon me, I will appear https://t.co/EZLb7g91Ew

— Robert Leshner (@rleshner) October 1, 2021

The incident is not strange for ChangeNOW. Back in 2019, the crypto exchange had also retrieved 500,000 XRP for GateHub after one of the users lost about 22M in Ripple tokens to hackers. 

While the incident helps reinstate fate in the crypto community, it also points out something equally important. For the reputation of DeFi protocols to be as spotless as possible, developers should ensure they identify all possible bugs before initiating any changes to the protocol.

Moreover, blockchains must implement mechanisms to maximize user protection if they expect to get widespread adoption going forward.