Bug puts $162 million up for grabs, says founder of DeFi platform Compound
We thought the carnage was over for popular decentralized finance, or DeFi, staking protocol Compound, but as it turns out, millions more than we thought are at risk. About $162 million is up for grabs after an upgrade gone very wrong, according to Robert Leshner, founder of Compound Labs.
The price of Compound’s native token, called comp, is down about 4.8%.
At first, the Compound chief tweeted Friday that there was a cap to how many comp tokens could be accidentally distributed, noting that “the impact is bounded, at worst, 280,000 comp tokens,” or about $92.6 million.
But on Sunday morning, Leshner revealed that the pool of cash that had already been emptied once had been replenished – exposing another 202,472.5 comp tokens to exploit, or roughly $66.9 million at its current price.
Some, including a core developer at DeFi platform Yearn, are billing this as the biggest-ever fund loss in a smart contract incident, but investors, for their part, don’t seem to care all that much.
“The crypto market shrugged off the largest-ever fund loss as if it was nothing,” said Mudit Gupta, a core developer at decentralized crypto exchange SushiSwap. “The future for DeFi is bright but we’re in uncharted territory, and there’s a lot to be learned still.”
What keeps going wrong
DeFi protocols such as Compound are designed to recreate traditional financial systems such as banks and exchanges using blockchains enriched with self-executing smart contracts.
On Wednesday, Compound rolled out what should have been a pretty standard upgrade. Soon after implementation, however, it was clear that something had gone seriously wrong, once users started to receive millions of dollars in comp tokens.
For example, $30 million worth of comp tokens were claimed in one transaction.
The saving grace of the entire debacle, however, was the fact that the pool of cash that was open to exploit – something called the Comptroller contract – had a finite amount of tokens. The problem is that this leaky pool got a fresh influx of cash, and 0.5 comp tokens are being added roughly every 15 seconds, according to Gupta.
“When the drip() function was called this morning, it sent the backlog (202,472.5, about two months of COMP since the last time the function was called) into the protocol for distribution to users,” Leshner wrote in a tweet Sunday morning.
Leshner noted that this brought the total comp at risk to 490,000 comp tokens, or about $162 million.
There are a few proposals to fix the bug, but Compound’s governance model is such that any changes to the protocol require a multiday voting window, and Gupta said it takes another week for the successful proposal to be executed.
In the meantime, this pool of cash is once again up for grabs for users who know how to exploit the bug.
Compound made clear that no supplied or borrowed funds were at risk, which is some consolation.
“No user funds are or were at risk so it’s not that big of a deal,” said Gupta. “Everyone kinda got diluted but didn’t lose anything directly.”
There are also some white hats in the community.
After the Compound founder begged users to voluntarily return the platform’s crypto tokens, some did. Leshner said that as of Sunday morning, about 117,000 comp tokens, or $38.7 million, had been returned.
But as Mati Greenspan, portfolio manager and Quantum Economics founder, points out, how things play out with this bug is almost entirely beside the point. “The bigger issue is — can it happen again?” he said.
Compound is the world’s fifth-largest DeFi protocol with a total value locked of $10.3 billion, according to DeFi Llama, which provides ranking and metrics for DeFi protocols.
Greenspan said the protocol can easily absorb this loss and a lot of it will likely be returned, “but the larger issue would be if people lose confidence in the system’s ability to function properly.”
Gupta said one immediate problem is that the Comptroller account has given away comp tokens that were reserved for future rewards.
You can think of Comptroller as the heart of Compound, Gupta explained. It facilitates all core features like borrowing, lending, and rewarding.
Comptroller oversees the pool of cash used to pay rewards to users who provide their crypto to borrowers at a set interest rate, which is typically a single-digit APY.
“Future rewards might have to be reduced to make Comptroller solvent,” said Gupta.
Microsoft Chairman and Chief Executive Officer Satya Nadella speaks during the Microsoft Build 2025, conference in Seattle, Washington, on May 19, 2025.
Jason Redmond | AFP | Getty Images
On a down day for the market, Microsoft reached a record high for the first time in 11 months.
Shares of the software giant rose 0.8% to close at $467.68. Microsoft has once again reclaimed the title of world’s largest company by market cap, with a valuation of $3.48 trillion. Nvidia has a market cap of $3.42 trillion, and Apple is valued at $3 trillion.
Microsoft last recorded a record close in July 2024. The stock is now up 11% for the year, while the Nasdaq is flat.
Tech stocks broadly dropped on Thursday, led by a plunge in Tesla, as CEO Elon Musk and President Donald Trump escalated their public beef. Musk, who was leading the Trump Administration’s Department of Government Efficiency (DOGE) until last week, has slammed the Trump-backed spending bill making its way through Congress, a spat that has turned personal.
But Microsoft investors appear to be tuning out that noise.
Microsoft CEO Satya Nadella focused on his company’s tight relationship with artificial intelligence startup OpenAI in an interview with Bloomberg, some portions of which were published on Thursday.
“Why would any one of us want to go upset that?” he told Bloomberg. Nadella told analysts in January that OpenAI had made a large new commitment with Microsoft’s Azure cloud. In total, Microsoft has invested nearly $14 billion in OpenAI.
WATCH: Trade Tracker: Jim Lebenthal buys more Cisco and Qualcomm and trims Microsoft
Technology
Anduril raises funding at $30.5 billion valuation in round led by Founders Fund, chairman says
The Anduril Industries headquarters in Costa Mesa, California, US, on Thursday, Dec. 14, 2023.
Kyle Grillot | Bloomberg | Getty Images
Defense tech startup Anduril Industries has raised $2.5 billion at a $30.5 billion valuation, including the new capital, Chairman Trae Stephens said on Thursday.
“As we continue working on building a company that has the capacity to scale into the largest problems for the national security community, we thought it was really important to shore up the balance sheet and make sure we have the ability to deploy capital into these manufacturing and production problem sets that we’re working on,” Stephens told Bloomberg TV at the publication’s tech summit in San Francisco.
Reports of the latest financing surfaced in February, around the same time the company took over Microsoft‘s multibillion-dollar augmented reality headset program with the U.S. Army. Last week, Anduril announced a deal with Meta to create virtual and augmented reality devices intended for use by the Army.
The latest funding round, which doubles Anduril’s valuation from August, was led by Peter Thiel’s Founders Fund. The venture firm contributed $1 billion, said Stephens, who’s also a partner at the firm.
Palmer Luckey, founder of Oculus and Anduril Industries, speaks during The Wall Street Journal’s WSJ Tech Live conference in Laguna Beach, California on October 16, 2023.
Patrick T. Fallon | AFP | Getty Images
Stephens said it’s the largest check Founders Fund has ever written.
Since its founding in 2017 by Oculus creator Palmer Luckey, Anduril has been working to shake up the defense contractor space currently dominated by Lockheed Martin and Northrop Grumman.
Anduril has been a member of the CNBC Disruptor 50 list three times and ranked as No. 2 last year.
Luckey founded Anduril after his ousting from Facebook, which acquired Oculus in 2014 and later made the virtual reality headsets the centerpiece of its metaverse efforts.
Stephens emphasized the importance of the recent partnership between the two sides, and “Palmer being able to go back to his roots and reach a point of forgiveness with the Meta team.”
In April, Founders Fund closed a $4.6 billion late-stage venture fund, according to a filing with the SEC. A substantial amount of the capital was provided by the firm’s general partners, including Stephens, a person familiar with the matter told CNBC at the time.
Anduril is one of the most highly valued private tech companies in the U.S. and has been able to reel in large sums of venture money during a period of few big exits and IPOs. While the IPO market is showing signs of life after a three-plus year drought, Anduril isn’t planning to head in that direction just yet, Stephens said.
“Long term we continue to believe that Anduril is the shape of a publicly traded company,” Stephens said. “We’re not in any rapid path to doing that. We’re certainly going through the processes required to prepare for doing something like that in the medium term. Right now we’re just focused on the mission at hand, going at this as hard as we can.”
WATCH: Why Palantir, Anduril are Washington’s new tech favorites
-
Sports3 years ago‘Storybook stuff’: Inside the night Bryce Harper sent the Phillies to the World Series
-
Sports1 year agoStory injured on diving stop, exits Red Sox game
-
Sports2 years agoGame 1 of WS least-watched in recorded history
-
Sports2 years agoMLB Rank 2023: Ranking baseball’s top 100 players
-
Sports4 years ago
Team Europe easily wins 4th straight Laver Cup
-
Environment2 years agoJapan and South Korea have a lot at stake in a free and open South China Sea
-
Environment2 years agoGame-changing Lectric XPedition launched as affordable electric cargo bike
-
Business3 years agoBank of England’s extraordinary response to government policy is almost unthinkable | Ed Conway