Before a serious incident from a "colleague" Aave took place last week, Compound Finance was quick to take precautions for itself.

Compound Finance imposes loan limit after attack on Aave
Compound Finance imposes lending limits after attack on

Lending platform users Compound Finance have agreed to the proposal to limit borrowing to a maximum of 10 tokens on the protocol. The proposal, launched by financial modeling firm Gauntlet, was approved on November 28 by a majority vote, although total voter participation represents less than 7% of COMP tokens in circulation.

In this proposal, the most notable are tokens stand out like () and COMP reduced the loan limit from 11.25 million and 150,000 to 550,000 and 18,000 respectively.

NS Other illiquidities on Compound were also significantly affected, such as (YFI), which reduced the loan limit from 1,500 to just 20. The version represents for on the chain of is Wrapped (WBTC), which previously had no loan limit on Compound, has dropped to 1,250.

Proposal 135 has passed with quorum. ✅

Proposal 135 sets borrow caps for ten Compound v2 markets.

The proposal will be applied in two days.

— Compound Governance (@compgovernance) November 28, 2022

According to Gauntlet, the proposal will prevent the risk of insolvency from liquidation, price manipulation and the danger of short or long an asset when taking advantage of loans on Compound, resulting in regulatory effects. substantial size relative to the circulating supply of that asset.

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The above problem is most evident in the recent breakdown of the lending protocol . On November 22, it was revealed that Avraham Eisenberg, who had been caught up in rumors of attacking the Mango Markets platform, had been trying to target by shorting bulk (), an illiquid token on Aave at the time for profit. However, it turned out that the slippage was much less than expected, and Eisenberg is said to have lost around $10 million after shorting. .

For an overview of this incident, please read the details through the article below:

Although the incident involved was not mentioned directly, Gauntlet also conducted risk assessment and modeling for Aave. Gauntlet then proposed freezing 17 tokens on Aave is at risk of being hacked due to lack of liquidity.

Overall, Compound Finance's latest proposal is the protocol's necessary action against the vulnerability Aave just left. Because by current estimates, Compound Finance is playing the role of the second largest lending platform in the market, behind only Aave and has a total loan of $654.7 million collateralized with assets worth up to $654.7 million. to 2.15 billion USD.

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