Oracle Exploit Sees $100 Million Liquidated on Compound

More than $ 100 million has been liquidated on the Compound lending platform in the past 24 hours LoanScan. That includes the third largest COMP farmer who was liquidated for $ 46 million Nansen CEO Alex Svanevik.

“To the best of my knowledge, the DAI price for Coinbase has been increased to a premium of around 30%. Compound’s Oracle uses Coinbase for price data. This led to liquidations as the value of the loans exceeded the collateralization thresholds, ”said Svanevik Decrypt.

He added, “As far as I can tell, Compound has worked exactly as it should. But questions are being asked about the Oracle.”

Compound is a platform that allows users to lend cryptocurrencies to other people. It is the third largest DeFi platform with $ 12.8 billion in assets included in its smart contracts. To borrow cryptocurrency, the user must provide collateral that exceeds the amount borrowed from them. However, these loans run on the decentralized Ethereum blockchain. If the blockchain determines that the collateral is undercollateralised, the loan will be liquidated.

However, the blockchain itself does not know the current prices of each coin – the prices live on exchanges, not on blockchains. So it checks the price on exchanges with oracles (things that connect blockchain to real data).

It appears that a malicious actor manipulated the price of DAI on the Coinbase Pro exchange to mislead the blockchain – via its oracles – that the current price of DAI has indeed skyrocketed. When the blockchain believed DAI had hit $ 1.30, it turned out that many of the loans were undercollateralised and liquidated them.

“Perhaps it will help with an example of what happened. If someone has a loan of $ 100 when the DAI is $ 1, the surge has caused their debt to go up to $ 130. So if you have that If you have only secured position up to USD 125, if you are I would be liquidated, “explained Svanevik.

$ 100 million was liquidated on Compound. Image:

“In the past 24 hours, nearly $ 90m worth of loans have been liquidated on @compoundfinance, with much of the DAI likely being due to Oracle issues as the Coinbase DAI / USDC currently soared to $ 1.3, including the pair, in which productive agriculture is concentrated, “tweeted a crypto researcher known as Arthur.

In March, Compound liquidated a value of $ 2.5 million, which was a record at the time. Well that pales in comparison.