Compound protocol bug accidentally sends $90 million to users
Compound, the popular “decentralized finance,” or DeFi, software protocol, just got a lot more popular, after it mistakenly gave out more than $90 million to users.
A bug in an upgrade resulted in the enormous payout. The founder of Compound is both pleading with people who received the cash to return it—and issuing a threat if they choose not to.
“If you received a large, incorrect amount of COMP from the Compound protocol error: Please return it,” Robert Leshner, founder of Compound Labs, which works on the Compound software, tweeted Thursday. “Keep 10% as a white-hat. Otherwise, it’s being reported as income to the IRS, and most of you are doxed.”
Compound’s crypto token–COMP–fell on the news, but quickly recovered. Whether the users will decide to return their newfound gains is a mystery. Replies to Leshner’s notice were mixed.
San Francisco-based Compound Labs is one of several DeFi companies that regulators are trying to get a grip on. The software it develops, also called Compound, eliminates human intermediaries like brokers, relying instead on algorithms to execute transactions. The technology is still young, which opens up the possibility for errors like this one.
Two years ago, Compound raised $25 million in Series A funding from venture capital firm Andreessen Horowitz. Leshner, a former economist, began Compound in part because he felt the cryptocurrency world was stuck in a zero-interest environment.
Leshner, two hours after his initial tweet, seemed a bit chastised by the replies, but still tried to appeal to the angels on users’ shoulders.
“I’m trying to do anything I can to help the community get some of its COMP back, and this was a bone-headed tweet / approach. That’s on me,” he wrote. “Luckily, the community is much bigger, and smarter, than just me. I appreciate your ridicule and support.”
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