After Mango Markets exploit, Compound suspends 4 tokens to protect against price manipulation

Compound users can no longer use YFI, ZRX, BAT, and MKR tokens as collateral for loans.

Decentralized lending protocol Compound has suspended the provision of four tokens as loan collateral on its platform, in an effort to protect users from potential attacks involving price manipulation, similar to the recent exploit of $117 million from Mango Markets, according to a recently adopted Compound forum governance proposal.

With the pause, users will not be able to deposit YFI (YFI) from Yearn.finance, ZRX from 0x, Basic Attention Token (BAT) and Maker's MKR (MKR) as collateral to take out loans.

The proposal passed on October 25 with 99% of all voters in favor. It stated:

“An attack based on oracle manipulation similar to the one that cost Mango Markets $117 million is much less likely to occur on Compound, as collateral assets have much greater liquidity than MNGOs and Compound requiring loans to be over-collateralized. However, out of an abundance of caution, we propose suspending supply for the above assets, given their relative liquidity profiles."

During a security review of Compound v2 conducted in September, the Volt Protocol team identified potential market manipulation risks associated with low liquidity tokens. The report explains:

“The attack is possible when the amount of a borrowable token on markets like Aave and Compound is large relative to the liquid market. The most notable example is ZRX, which has borrowable liquidity on each of these markets comparable to or greater than usual daily volume on all centralized and decentralized exchanges."

Twittering Robert Leshner, founder of Compound, explained that the conservative approach would not impact existing users.

Following the @mangomarkets exploit,