{"id":1096392,"date":"2021-10-06T16:05:59","date_gmt":"2021-10-06T20:05:59","guid":{"rendered":"https:\/\/www.bitcoinmarketjournal.com\/?p=138585"},"modified":"2021-10-06T16:05:59","modified_gmt":"2021-10-06T20:05:59","slug":"defi-protocol-compound-accidentally-makes-users-crypto-rich","status":"publish","type":"station","link":"https:\/\/platoaistream.com\/plato-data\/defi-protocol-compound-accidentally-makes-users-crypto-rich\/","title":{"rendered":"DeFi Protocol Compound Accidentally Makes Users \u201cCrypto Rich\u201d"},"content":{"rendered":"\n
You can\u2019t make an omelet without breaking a few eggs, and it seems like the DeFi market just broke a few flats.<\/p>\n
For those of you who haven\u2019t heard by now\u2026<\/p>\n
<\/p>\n
For anyone not familiar, Compound protocol is by far one of the most prominent projects in DeFi lending, and the recent incident comes after a routine upgrade led to a critical bug in the system, not too dissimilar to what happened to Facebook yesterday.<\/p>\n
Many analysts chose to focus on the reaction provided by Robert Leshner, founder and CEO of Compound Labs, who sent out a particularly controversial tweet<\/a> in response to the bug asking users to please return the funds, or else. \u2026<\/p>\n <\/p>\n For what it\u2019s worth, Leshner was quite quick to walk back these comments.<\/p>\n It\u2019s still not clear whether he was threatening to report users to the IRS, or whether he\u2019s even able to do that.<\/p>\n It\u2019s more likely that he was trying to say that if people cashed out, they\u2019d need to pay taxes, which doesn\u2019t seem like a great deterrent.<\/p>\n The entire saga brings up some serious soul-searching questions about what crypto represents and why are we into it.<\/p>\n When I was eight years old, a cashier accidentally gave me five dollar bill instead of a single. It took me several difficult moments of deliberation outside the store to decide that the right thing to do was to return the money.<\/p>\n Would I have made the same call if we were talking about millions of dollars? Would you?<\/p>\n Now, add to the equation that when it comes to the Compound situation, the money potentially being kept isn\u2019t actually coming from anyone\u2019s pocket.<\/p>\n The COMP tokens that were mistakenly distributed came from the protocol itself, a protocol that currently has approximately $10 billion<\/a> locked in it.<\/p>\n The major impact on other users would be that the freshly unlocked tokens would add to the circulating supply and possibly dilute the price.<\/p>\n Certainly, dumping them on the open market would be the wrong thing to do, but what harm would be caused by holding on to them for a bit? After all, we\u2019re here to make money, aren\u2019t we?<\/p>\n Despite all that and the founder\u2019s impulsive reaction, apparently some people have decided to send the money back. As reported<\/a> by CNBC yesterday, a total of $38.7 million has already been returned.<\/p>\n This comes as little surprise to me though. The community spirit is incredibly strong in the crypto world.<\/p>\n This same mentality is also responsible for an Ethereum miner who recently returned<\/a> an erroneous $24 million mining fee and the now famous polymath hacker who returned<\/a> almost all of the $600 million stolen in a legendary crypto heist.<\/p>\n All programs have bugs. We saw that with Facebook yesterday in their record-breaking downtime.<\/p>\n Unlike Facebook, however, the people building this new and exciting market clearly have a strong moral compass and are often choosing to prioritize the virtues of what we\u2019re creating above accumulating personal wealth.<\/p>\n DeFi may not be ready for prime-time finance just yet. Most of the projects are still under construction and new economic models are being tested.<\/p>\n But we\u2019re getting there quickly. Just today, we saw The Financial Conduct Authority bring a new DeFi protocol under its regulatory wing, a huge step forward for the industry. There is even bigger news from the U.S., however. \u2026<\/p>\n <\/p>\nMoral compass<\/h2>\n
The way forward<\/h2>\n