The Compound community is poised to vote on raising the supply limitation for wrapped Ethereum (WETH) in the Comet market, as the current limit is approaching.
The Compound vote is based on a proposal submitted recently by Paul J. Lei, protocol program manager at DeFi risk management Gauntlet. Lei’s suggestion advocated for a 100% increase in the Comet USDC market’s WETH supply cap.
The third version of the DeFi lending protocol is Comet, sometimes known as Compound III. It is the first iteration of the platform to go multi-chain, with support for EVM-compatible networks
Compound III was released on the Comet USDC version 3 market with a supply restriction of 75,000 WETH. According to data from the Comet dashboard, the supply cap is only 0.18 WETH away from being reached. If Lei’s suggestion is approved, the cap will be raised to 150,000 WETH.
According to Compound Finance creator Robert Leshner, the community has previously debated taking such a move.
Supply limitations are critical for DeFi lending systems since they define how much of the token users can use as collateral to get loans.
DeFi lending systems employ collateral asset supply limitations to protect against price manipulation attacks, which may occur when hostile actors target tokens with insufficient liquidity profiles to conduct sophisticated assaults on DeFi lending pools.
Compound is a software running on Ethereum that aims to incentivize a distributed network of computers to operate a traditional money market.
The platform allows users to deposit cryptocurrency into lending pools for access by borrowers. Lenders then earn interest on the assets they deposit.
Once a deposit is made, it awards a new cryptocurrency called a cToken (which represents the deposit) to the lender. Examples of cTokens include cETH, cBAT and cDAI.
Compound and Aave have recently taken steps to limit their exposure to these attack vectors, either by suspending the use of certain tokens as collateral or by significantly reducing their supply caps.
DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.
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