Due to a mistake by the developer of the DeFi PercentFinance application, a fork of Compound Finance, 446,000 USDC, 28 WBTC and 313 ETH were frozen, the total value of which exceeds $ 1 million
The DeFi platform team PercentFinance wrote in a blog post that “there is a problem in some money markets that could lead to permanent blocking of users’ assets.” The team froze money markets for USDC, ETH and WBTC.
A total of 446,000 USDC, 28 WBTC and 313 ETH are frozen, equivalent to roughly $ 1 million. According to a blog post, half of these assets are owned by the “community development team” PercentFinance. The withdrawal of money from other markets is open, but the team urges users not to take out loans in any of the PercentFinance markets.
In a Discord discussion of the vulnerability, Ethereum developer and PercentFinance Vfat said that another developer who forked PercentFinance from Compound Finance “used old Compound contracts instead of … newer, much better versions.”
Vfat has begun updating some of these smart contracts, in particular the platform’s lending interest rate regulation. After Vfat completed the changes and deployed them, it realized that the signatures for the old and new contracts were incompatible, so no transactions could be signed with them.
“The old and new interest rate models have different signatures for all of these important features,” he said in a Discord chat. “Basically, the token contract is trying to find an interest rate function that doesn’t work, so it fails on every interaction.”
According to Vfat, “The Compound team has confirmed that this means a contract lock.” He noted that it is too early to talk about an asset recovery plan, as the protocol developers have not yet communicated with Center or BitGo – issuers of USDC and WBTC, respectively.
In theory, USDC and WBTC issuers could blacklist addresses with blocked assets. After being blacklisted, BitGo and Center could re-issue new tokens to the old owners, which Tether did for a trader who mistakenly transferred 1 million USDT to the wrong address.
A Center spokesman said the company can only interfere with USDC transactions if it receives “a valid, binding order from a competent US court that has authority over Center.”
Regarding other recovery efforts, Vfat said one early-stage proposal involves the launch of new contracts for the USDC credit markets. Although 27% of loans are fixed in the old contracts, the new contracts will allow borrowers to pay off the remainder of their loans, thus obtaining their collateral and paying the lenders $ 0.73 cents on $ 1. At the same time, there are no opportunities to return the ETH blocked in the contract.
“Regardless of what happens next, I take responsibility for the lost assets and will do everything in my power to recover the losses,” Vfat said.
