Governance Proposal

Compound cETH market bricked by update — 7-day wait on vote to fix it

The code bug has plagued the cETH market and has affected Compound’s front-end user face, but the CEO confirmed that “funds are not immediately at risk.”

Decentralized lending platform Compound has been plagued by a code bug in a recent governance proposal to update its price feeds.

The code error has “temporarily frozen” the Compound Ether (cETH) market, causing cETH transactions to revert, but Compound Labs stated that despite the front end not working, “funds are not immediately at risk.”

Compound Labs announced on Wednesday that the code bug came from Proposal 117: Compound Oracle Upgrade v3, which was implemented a couple of hours ago to update the oracle contracts on the Compound protocol to a new version that uses Uniswap V3 instead of V2 for price feeds.

An hour ago, Proposal 117 was executed, which updated the price feed that Compound v2 uses.

This price feed, while audited by three auditors, contained an error that is causing transactions for ETH suppliers and borrowers to revert.https://t.co/a2DFk7h0ET

— Compound Labs (@compoundfinance) August 30, 2022

In response to the cETH market temporarily freezing, Compound Labs said it aimed to revert to the previous price feed via Proposal 119: Oracle Update. The new proposal was created less than one hour after Proposal 117 had been executed, however, it now needs to go through a seven-day governance process before taking effect.

According to an update from security solutions architect Michael Lewellen of OpenZeppelin, the code bug came from the “getUnderlyingPrice” function, which did not update the price of cETH tokens, which would return empty bytes and cause the call to be reverted.

Read the following post for details on a Compound incident we are working to resolve for the cETH market. A fix is already underway and no funds are at risk at this time. The rest of the cToken markets on Compound V2 and all of V3 remain functional.https://t.co/CiSE3a99Wa

— OpenZeppelin (@OpenZeppelin) August 30, 2022

Lewellen also reaffirmed that no funds are at risk:

“The primary issue right now is a temporary denial of service for the cETH market which will be resolved by the new governance proposal. No funds are at risk at this time. The rest of the cToken markets on Compound V2 and all of V3 remain functional.”

However, Lewellen added that “any users that deposited ETH and obtained cETH for opening borrow positions must be aware that they might get instantly liquidated whenever the fix proposal executes if by that time the price of ETH has dropped significantly.”

But, the CEO of Compound Labs, Robert Leshner, also added that users can still repay any debt and add collateral to avoid liquidation.

Compound Labs noted the code bug came despite the oracle contract being audited from three separate smart contract auditing companies, with OpenZeppelin and ChainSecurity among the recent firms to have audited Compound’s smart contracts.

Proposal 117 itself didn’t appear to be a controversial one, with all 696,665 votes from 245 different wallet addresses in favor of the price feed upgrade. Crypto investment firm Polychain Capital cast the most votes (306,146) in favor of the proposal.

According to DefiLlama, Compound is the third largest decentralized lending platform, with a $2.67 billion total value locked (TVL). The news has not affected Compound (COMP) so far, which is sitting at $48.27 at the time of writing.

Aave calls on members to commit to Ethereum PoS chain

The outcome will give a good indication of where AAVE tokenholders stand ahead of the upcoming ETH hard fork.

Aave (AAVE) tokenholders have been asked to take part in an Aave Request for Comment (ARC) that would require them to ”commit” to Ethereum’s proof-of-stake (PoS) consensus.

The ARC, proposed on Tuesday, comes in light of Ethereum’s upcoming transition to proof-of-stake. It calls for members to select the Ethereum mainnet running under PoS consensus as the new “canonical” governance system while also giving power to an authority to shut down any Aave deployments on any alternative Ethereum forks.

ARC for the Aave DAO to signal support PoS ETH upon The Merge https://t.co/0A4YkpHLdq

— stani.lens @ ETHLatam (,) (@StaniKulechov) August 16, 2022

The proposal will soon be made on Aave’s decentralized autonomous organization (DAO), which allows AAVE tokenholders to vote on software developments and updates to the Aave protocol.

As outlined on Aave’s governance website, the proposal comes with two main specs. Firstly, members will formally signal that the Aave DAO deployed on Ethereum mainnet’s PoS consensus is the “canonical governance [mechanism]” of the Aave DAO and Aave markets.

Secondly, a signal will give the Community Guardian the authority to shut down any Aave deployments on any other forks that arise from the Ethereum Merge.

Aave Companies have proposed this ARC that calls for the Aave DAO to commit to selecting the Ethereum Mainnet running under the Proof of Stake consensus https://t.co/eDGwjLFKz7

— Aave (@AaveAave) August 16, 2022

The outcome of the governance vote should give a good indication as to where Aave members stand with respect to Ethereum’s transition to PoS.

In the report, Aave also declared that its code was “fully functional” with Ethereum’s consensus change, which was done by deploying Aave v3 on the Ropsten and Goerli testnets during the Merge tests.

The Ethereum Merge is set to take effect on Sep. 15, according to the latest tentative schedule set by Ethereum core developer Tim Beiko.

Having first been deployed on the Ethereum mainnet, Aave is now on Avalanche, Arbitrum, Optimism, Polygon, Fantom and Harmony. However, $5.44 billion, or 72.6%, of Aave’s total value locked (TVL) resides on Ethereum, so any alternative Ethereum forking that stems from the Merge could impact the Aave market and token price.

The price of the AAVE token is $109.95 at the time of writing. Aave is currently the third largest DAO by market cap of $1.54 billion after Uniswap and ApeCoin.