Decentralized finance (DeFi) lending protocol Compound saw its token COMP plunge by roughly 10% Thursday, after a bug in its computer program rendered the platform overpaying millions of dollars in COMP as liquidity mining rewards.
Compound is the world’s fifth largest decentralized finance protocol, with more than $9 billion value locked, according to data provider DeFi Pulse. Like many other DeFi platforms, Compound rewards some users with its tokens for using the platform and providing liquidity, as an incentive.
After a recent upgrade, a new program that distributes the liquidity mining rewards, contains a bug, causing some users to “receive far too much,” Robert Leshner, founder and CEO of Compound Labs wrote on Twitter.
The bug may impact at worst 280,000 COMP, or $84.6 million based on the token’s current price, according to Leshner. However, all supplied and borrowed assets are unaffected, he wrote.
COMP is recently trading at $300, down 9.2% over the past 24 hours.
The incident also highlighted decentralized finance protocol’s potential downside.
The new program was written by a community member, with review from multiple other community members, according to Leshner. “This is the greatest opportunity, and greatest risk for a decentralized protocol–that an open development process allows a bug to enter production,” he wrote.
As there is no administrator control to disable the COMP distribution, any changes would require a 7-day governance process, according to Leshner.
Investors have also been watching another decentralized platform Terra, as the blockchain completed its long-awaited Columbus-5 upgrade on Thursday, which would allow the blockchain to link with more decentralized applications and increase the burning rate of its native Luna token.
Luna is the world’s 13 largest cryptocurrency in market capitalization, according to CoinMarketCap. Terra also powers stablecoin TerraUSD, a cryptocurrency 1:1 pegged to U.S. dollars through algorithms.