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DeFi Lender Compound Tightens Borrow Limits After Aave Exploit Attempt

Krisztian Sandor - CoinDesk
2022-11-29 16:08
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Decentralized lending protocol Compound Finance passed a proposal to impose loan limits and introduce new borrow caps to lower risk on its platform.
The community voted overwhelmingly in favor to introduce or lower the maximum borrow amount for ten cryptocurrencies, including wBTC, LINK and UNI.
“Setting borrow caps helps avoid high-risk attack vectors while sacrificing little capital efficiency and allowing for a threshold of organic borrow demand,” the proposal read.
The voting concluded on Monday and it is in queue for execution at press time.
The passed proposal introduces borrow caps for five cryptocurrencies and sets stricter loan limits for another five. (Compound Finance)
Compound’s action comes after an alleged exploit attempt on Aave – a rival lending platform – brought scrutiny to any potential vulnerabilities in decentralized finance (DeFi) protocols’ lending mechanism.
The exploiter, who appeared to be infamous DeFi trader Avi Eisenberg, borrowed large sums of illiquid CRV tokens on Aave in an attempt to create bad debt on the protocol. Aave froze borrowing in 17 crypto assets yesterday to mitigate risk from potential attacks before its network upgrade.
Eisenberg became known for his self-described ““highly profitable trading strategy” exploiting a loophole on Solana-based DeFi hum Mango Markets, draining $114 million from the protocol last month.
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