Sam Martin

Aave

Fed Speeds Tapering, Borrowing Activity on Aave, Compound, Maker, Anchor Slides: Markets Wrap

<div id="highlights-block_617725d07bf3f" class="highlights">
        <ul>
                <li>Bitcoin experienced intense volatility that coincided with the closing of CME futures markets</li>
                <li>AAVE, MKR and COMP battle it out for DeFi marketshare</li>
            </ul>
    
</div>



<p>Bitcoin (BTC) experienced a mini flash crash around 2:15 PM ET today but quickly recovered.</p>



<p>Perpetual funding rates remain an important metric to keep an eye on. </p>



<p>Some industry experts believe that the volatility can be attributed to the recently approved BTC ETF.</p>



<p>The borrowing and lending space in DeFi may be large enough for AAVE, COMP and MKR to all thrive. </p>



<p>Despite recent turbulence in the NFT space, there remains a lot of catalysts for price appreciation. </p>



<h3 class="wp-block-heading"><strong>Latest in Macro:</strong></h3>



<ul class="wp-block-list"><li>S&amp;P 500: 4,596, +.98%</li><li>NASDAQ: 15,448, +1.39%</li><li>Gold: $1,799, +.03%</li><li>WTI Crude Oil: $83.06, +.48%</li><li>10-Year Treasury: 1.578%, +.049%</li></ul>



<h3 class="wp-block-heading"><strong>Latest in Crypto:</strong></h3>



<ul class="wp-block-list"><li>BTC: $60,972, +3.40%</li><li>ETH: $4,264, +6.38%</li><li>ETH/BTC: .0700, +4.31%</li><li>BTC.D: 44.65%, -.84%</li></ul>



<h3 class="wp-block-heading">BTC liquidation cascade</h3>



<p>Bitcoin experienced an intense period of volatility today around 2:15 PM ET, with the BTC price falling as low as $57,653 before quickly recovering. There was a strong rally in the middle of last night from $58,000 up to nearly $62,000 right before the sell-off.</p>



<p>It appears speculators got too excited too quickly, as perpetual funding rates were racing higher as the price action traded in a range right before the sell-off. </p>



<p>&#8220;The funding rate is derived from the difference between the market price of perpetuals and the spot index it’s anchored to. Excessive buying of perps increases the spread between perp price and the spot index, causing funding to go up. Conversely, negative funding is incited by an influx of perp shorting, forcing the contract’s price to fall lower than spot prices,&#8221; <a href="https://members.delphidigital.io/reports/leverage-wipes-out-but-is-the-worst-behind-us/" target="_blank" rel="noreferrer noopener">wrote</a> Ashwath Balakrishnan of Delphi Digital.</p>



<p>He continued, &#8220;For funding to fall lower, one of two things needs to happen: either existing longs get shaken out and are forced to cover, or there’s an increase in bearish sentiment prompting traders to go net short. Either way, it’s unclear whether we’ve found a local bottom yet.&#8221;</p>



<p>As seen in the following chart, open interest weighted funding rates raced higher prior to the dip in price. Unfortunately, traders began getting aggressive quickly after the correction which signals additional caution may be appropriate. </p>



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1024" height="683" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/10/oi-weighted-funding-rate-2-1024x683.jpeg" alt="" class="wp-image-10064" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/10/oi-weighted-funding-rate-2-1024x683.jpeg?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/oi-weighted-funding-rate-2-1024x683.jpeg?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/oi-weighted-funding-rate-2-1024x683.jpeg?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/oi-weighted-funding-rate-2-1024x683.jpeg?w=386 386w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/oi-weighted-funding-rate-2-1024x683.jpeg?w=392 392w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/oi-weighted-funding-rate-2-1024x683.jpeg?w=329 329w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/oi-weighted-funding-rate-2-1024x683.jpeg?w=80 80w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/oi-weighted-funding-rate-2-1024x683.jpeg?w=1200 1200w" sizes="auto, (max-width: 1024px) 100vw, 1024px" /><figcaption>Source: Laevitas.ch</figcaption></figure>



<p>According to Skew, roughly $32 million worth of futures positions were liquidated in just a 10-minute window. </p>



<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="869" height="333" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-28-at-4.00.35-PM.png" alt="" class="wp-image-10060" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-28-at-4.00.35-PM.png?w=869 869w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-28-at-4.00.35-PM.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-28-at-4.00.35-PM.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-28-at-4.00.35-PM.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-28-at-4.00.35-PM.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-28-at-4.00.35-PM.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-28-at-4.00.35-PM.png?w=80 80w" sizes="auto, (max-width: 869px) 100vw, 869px" /><figcaption>Source: Skew.com</figcaption></figure>



<h3 class="wp-block-heading">Are BTC ETFs to blame?</h3>



<p>Some industry experts believe that the volatility can be attributed to the recently <a href="https://cms.blockworks.co/first-bitcoin-futures-etf-nears-1b-on-first-day-of-trading/" target="_blank" rel="noreferrer noopener">approved</a> BTC ETF, which is backed by leveraged positions in the form of cash-settled futures contracts. </p>



<p>Caitlin Long, 22-year Wall Street Veteran and founder of Avanti, took to Twitter to share her thoughts:</p>



<figure class="wp-block-embed aligncenter is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true"><p lang="en" dir="ltr">ANOTHER LEVERAGED SLAMDOWN in <a href="https://twitter.com/hashtag/bitcoin?src=hash&amp;ref_src=twsrc%5Etfw">#bitcoin</a> trading mkts today. Again, this is the type of foreseeable event that happens with the bad kind of financialization (the leveraged kind). It increases the cost of capital for the whole sector. smh <a href="https://t.co/hC1sbEtiXx">https://t.co/hC1sbEtiXx</a></p>&mdash; Caitlin Long 🔑⚡️🟠 (@CaitlinLong_) <a href="https://twitter.com/CaitlinLong_/status/1453807532443455488?ref_src=twsrc%5Etfw">October 28, 2021</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



<p>It is unclear if the added leverage via ETF approvals to the BTC ecosystem is to blame for the volatility in price.</p>



<p>It is worth noting, however, that the CME only accounts for roughly 20% of aggregated futures open interest albeit a growing portion. This is significant to add because the CME is where all of the futures are being traded that back the aforementioned ETFs. </p>



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1024" height="572" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/10/skew_btc_futures__aggregated_open_interest-1024x572.png" alt="" class="wp-image-10067" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/10/skew_btc_futures__aggregated_open_interest-1024x572.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/skew_btc_futures__aggregated_open_interest-1024x572.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/skew_btc_futures__aggregated_open_interest-1024x572.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/skew_btc_futures__aggregated_open_interest-1024x572.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/skew_btc_futures__aggregated_open_interest-1024x572.png?w=467 467w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/skew_btc_futures__aggregated_open_interest-1024x572.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/skew_btc_futures__aggregated_open_interest-1024x572.png?w=80 80w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/skew_btc_futures__aggregated_open_interest-1024x572.png?w=1200 1200w" sizes="auto, (max-width: 1024px) 100vw, 1024px" /><figcaption>Source: Skew.com</figcaption></figure>



<h3 class="wp-block-heading">Aave, Compound and MakerDAO battle it out for marketshare</h3>



<p>Aave (AAVE) and Compound (COMP) facilitate peer-to-peer borrowing and lending. Liquidity providers (LPs/lenders) earn interest for their services, while borrowers pay interest on top of their loans to pay the LPs. </p>



<p>MakerDAO (MKR) allows users to take out loans by locking up digital assets as collateral in return for a decentralized stablecoin, DAI. However, borrowers need to be attentive to their loan-to-collateral ratio as asset prices fluctuate in order to avoid having their collateral liquidated. </p>



<p>AAVE, COMP and MKR all compete for users&#8217; appetites to take on leverage via borrowing. However, when it comes to lending it is really just AAVE and COMP battling for market share because they have peer-to-peer ecosystems versus MKR&#8217;s collateralized debt position (CDP) model. </p>



<p>AAVE currently leads based on total valued locked (TVL) in its platform, followed by MKR at third and COMP at seventh: </p>



<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="1001" height="379" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-28-at-5.14.40-PM.png" alt="" class="wp-image-10074" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-28-at-5.14.40-PM.png?w=1001 1001w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-28-at-5.14.40-PM.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-28-at-5.14.40-PM.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-28-at-5.14.40-PM.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-28-at-5.14.40-PM.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-28-at-5.14.40-PM.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-28-at-5.14.40-PM.png?w=80 80w" sizes="auto, (max-width: 1001px) 100vw, 1001px" /><figcaption>Source: DefiLlama</figcaption></figure>



<p>According to the following Dune Analytics dashboard, the percentage of market participants interacting with COMP has remained consistent since mid-2020, whereas AAVE has stolen a lot of marketshare away from MKR. </p>



<p>COMP and MKR each hold a 25% market share of active addresses versus AAVE with 50%. </p>



<div class="wp-block-image"><figure class="aligncenter size-full"><img loading="lazy" decoding="async" width="625" height="281" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-28-at-5.21.24-PM.png" alt="" class="wp-image-10076" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-28-at-5.21.24-PM.png?w=625 625w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-28-at-5.21.24-PM.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-28-at-5.21.24-PM.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-28-at-5.21.24-PM.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-28-at-5.21.24-PM.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-28-at-5.21.24-PM.png?w=80 80w" sizes="auto, (max-width: 625px) 100vw, 625px" /></figure></div>



<p>However, the picture looks a lot different when looking at the market share of loans outstanding per project. AAVE leads with a 35.7% market share, with MKR in 2nd with 34.5%, and COMP in last with 29.9%. </p>



<p>This implies that while there are fewer active addresses on MKR taking out loans, they are players with very big pockets and trust the stablecoin, Dai, is a pristine asset.</p>



<div class="wp-block-image"><figure class="aligncenter size-full"><img loading="lazy" decoding="async" width="410" height="318" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-28-at-5.27.46-PM.png" alt="" class="wp-image-10077" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-28-at-5.27.46-PM.png?w=410 410w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-28-at-5.27.46-PM.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-28-at-5.27.46-PM.png?w=331 331w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-28-at-5.27.46-PM.png?w=337 337w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-28-at-5.27.46-PM.png?w=282 282w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-28-at-5.27.46-PM.png?w=80 80w" sizes="auto, (max-width: 410px) 100vw, 410px" /></figure></div>



<p>With roughly $80 billion of loans outstanding between the three protocols and only 3.5 million DeFi users, the total addressable market and growth run way is extremely large. Only time will tell if all three protocols can thrive side by side.</p>



<h3 class="wp-block-heading">Non-Fungible Tokens (NFTs)</h3>



<figure class="wp-block-embed aligncenter is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true"><p lang="en" dir="ltr">&#8211; Twitter is implementing NFTs<br>&#8211; Coinbase is building an NFT marketplace<br>&#8211; Facebook is all in on Metaverse<br>&#8211; GameStop is building an NFT marketplace<br>&#8211; Nike working on NFT verification of shoes<br>&#8211; Warner Bros looking to release music NFTs<br><br>Heck yeah I&#39;m bullish</p>&mdash; Cobble ᵍᵐ (@cobble) <a href="https://twitter.com/cobble/status/1453692007046647810?ref_src=twsrc%5Etfw">October 28, 2021</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



<p>Trading data from <a href="https://opensea.io/rankings" target="_blank" rel="noreferrer noopener">OpenSea</a> and <a href="https://solanalysis.com" target="_blank" rel="noreferrer noopener">Solanalysis</a> of some of the top Solana and Ethereum projects can be found in the photos below:</p>



<div class="wp-block-image"><figure class="aligncenter size-large"><img loading="lazy" decoding="async" width="1024" height="331" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-28-at-5.44.13-PM-1024x331.png" alt="" class="wp-image-10078" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-28-at-5.44.13-PM-1024x331.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-28-at-5.44.13-PM-1024x331.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-28-at-5.44.13-PM-1024x331.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-28-at-5.44.13-PM-1024x331.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-28-at-5.44.13-PM-1024x331.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-28-at-5.44.13-PM-1024x331.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-28-at-5.44.13-PM-1024x331.png?w=80 80w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-28-at-5.44.13-PM-1024x331.png?w=1234 1234w" sizes="auto, (max-width: 1024px) 100vw, 1024px" /><figcaption>Top Ethereum Projects</figcaption></figure></div>



<div class="wp-block-image"><figure class="aligncenter size-large"><img loading="lazy" decoding="async" width="1024" height="282" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-28-at-5.43.56-PM-1024x282.png" alt="" class="wp-image-10079" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-28-at-5.43.56-PM-1024x282.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-28-at-5.43.56-PM-1024x282.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-28-at-5.43.56-PM-1024x282.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-28-at-5.43.56-PM-1024x282.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-28-at-5.43.56-PM-1024x282.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-28-at-5.43.56-PM-1024x282.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-28-at-5.43.56-PM-1024x282.png?w=80 80w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/Screen-Shot-2021-10-28-at-5.43.56-PM-1024x282.png?w=1208 1208w" sizes="auto, (max-width: 1024px) 100vw, 1024px" /><figcaption>Top Solana Projects </figcaption></figure></div>



<p>If you made it this far, thanks for reading! Looking forward to catching up tomorrow.</p>



<hr class="wp-block-separator"/>



<p><strong>Are you a UK or EU reader that can&#8217;t get enough investor-focused content on digital assets? <a target="_blank" href="https://cms.blockworks.co/events/das-london/" rel="noreferrer noopener">Join us</a>&nbsp;in London on November 15th and 16th for the Digital Asset Summit (DAS) London. Use code ARTICLE for £75 off your ticket.&nbsp;<a target="_blank" href="https://cms.blockworks.co/events/das-london/" rel="noreferrer noopener">Buy it now</a>.</strong></p>



<hr class="wp-block-separator"/>


AAVE, COMP MKR Battle for Market Share; BTC ETFs Fuel Leverage: Markets Wrap

Macauley Peterson

<div id="highlights-block_61647bab3b1f6" class="highlights">
        <ul>
                <li>Over $51 million of the erroneously distributed COMP has been returned to the Compound treasury</li>
                <li>The mishap points to decentralized governance as a double-edged sword</li>
            </ul>
    
</div>



<p>It started as a technocratic tweak to a long-running DeFi blue chip. “Proposal 62” voted on by holders of the Compound protocol’s governance token, COMP, was meant to give governance wider latitude in distributing incentives to lenders and borrowers.</p>



<p>Compound kicked off the 2020 “DeFi summer” with its then-novel use of liquidity mining following the debut of its COMP governance token in June of last year. With it, anyone providing or using liquidity in the money market protocol would earn COMP — lenders and borrows benefitted equally — rewards were split 50/50.</p>



<p>After a year of real-world testing, it became clear there were some unintended and deleterious side effects, particularly in non-stablecoin markets: WBTC (wrapped bitcoin), for example, could be borrowed at effectively a negative interest rate.</p>



<p>To address this problem, <a href="https://compound.finance/governance/proposals/62">Proposal 62</a>, enabled COMP rewards to be set heterogeneously across markets. It passed unanimously and went into effect on September 29.</p>



<p>Then, trouble:</p>



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true"><p lang="en" dir="ltr">🚨 Unusual activity has been reported regarding the distribution of COMP following the execution of Proposal 062.<br><br>No supplied/borrowed funds are at risk &#8212; Compound Labs and members of the community are investigating discrepancies in the COMP distribution.</p>&mdash; Compound Labs (@compoundfinance) <a href="https://twitter.com/compoundfinance/status/1443359184897069060?ref_src=twsrc%5Etfw">September 29, 2021</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



<p>The protocol was paying out too much in COMP rewards to a subset of its users. It needed an immediate patch, first to pause all COMP distribution and then to repair the design flaw in Prop 62.</p>



<p>Compound Labs Inc., a Delaware corporation headquartered in San Francisco, originally developed the protocol, but in a move to decentralize control over its future evolution, they implemented a governance process of reviews, voting, and finally what’s known as a “timelock” on all changes approved by COMP token holders. The mechanism was aimed to prevent malicious code from being quickly rammed through and to move the company out of a primary decision-making role, but in this case, it also meant that any attempt to fix the bug would take at least seven days.</p>



<p>So, is decentralization partly to blame? The founder of Compound, Robert Leshner, doesn’t think so:</p>



<p>“This is not an event that calls into question whether <a href="https://cms.blockworks.co/what-are-corporations-going-to-do-with-all-that-extra-cash-put-it-in-defi/" target="_blank" rel="noreferrer noopener">DeFi</a> can be operated safely. It’s a wake-up call for decentralized, community-run protocols to improve the processes by which changes are introduced,” Leshner <a href="https://www.bloomberg.com/news/articles/2021-10-01/defi-platform-mistakenly-sends-89-million-ceo-begs-its-return">told Bloomberg</a>.</p>



<p>Leshner was quick to downplay the consequences of the bug on Twitter:</p>



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true"><p lang="en" dir="ltr">All supplied assets, borrowed assets, and positions are completely unaffected. Users don&#39;t have to worry about their funds; the only risk is that you (or another user) receives an unfairly large quantity of COMP.</p>&mdash; Robert Leshner (@rleshner) <a href="https://twitter.com/rleshner/status/1443380521019584514?ref_src=twsrc%5Etfw">September 30, 2021</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



<p>A fix was <a href="https://twitter.com/compoundfinance/status/1446105336704864256">passed</a> through governance on October 7, and was executed on Saturday, stopping the COMP bleed.</p>



<p>In a typically DeFi twist, Leshner <a href="https://twitter.com/rleshner/status/1446865360448278534">announced</a> that 163,000 COMP tokens that were incorrectly claimed had been returned to the Compound community. That’s about $50 million worth of windfall tokens not taken. A further 130,000 — or roughly $40 million — that could have been expropriated, were left untouched. It’s as though the code to your front door security system was sent to everyone in your address book, along with a picture of the suitcase full of cash just inside, but no one wanted to turn the handle.</p>



<p>For now, there remain 200,000 COMP tokens that were in fact claimed and which have not been returned. That has the effect of diluting all holders of COMP.</p>



<p>Despite the slip-up, the COMP price has remained around $300 per token, without seeing a marked adverse reaction to its price.</p>
