How much was lost in the Compound Labs hack?

The Compound Labs hack resulted in $71.1M in losses on September 30, 2021.

What attack technique was used in the Compound Labs exploit?

The Compound Labs exploit utilized Other. Understanding this attack vector is critical for smart contract auditors and developers building secure DeFi protocols.

How can developers prevent similar smart contract attacks?

Preventing smart contract hacks requires a combination of secure coding practices, thorough security audits, and understanding common attack vectors like reentrancy, oracle manipulation, and access control flaws. Smart Contract Hacking (SCH) provides hands-on training to help developers and auditors identify and prevent vulnerabilities before deployment.

Compound Labs Hack

TOTAL LOST $71.1M

High #100 All-Time Sep 30, 2021 Other

Affected Chain 2021 Incident surface

Recovered - No recovery reported

All-Time Rank #100 By amount stolen

Protocol Type Exploit/Other Target category

Incident Overview

Quick Summary

Compound's new proposal caused a loss of 237,000 $COMP tokens due to the smart contract issue

Details of the Exploit

Compound's governance Proposal 62 changed the distribution in the Comptroller contract to liquidity suppliers and borrowers from a previous 50:50 split to new governance proposed ratios:

https://compound.finance/governance/proposals/62

However, the Comptroller contract contains a bug, causing some users to receive too much COMP. The Comptroller received tokens for distribution from the Reservoir contract at:

https://etherscan.io/tx/0xe7616779…9f2322

84,000,000 in $COMP tokens are at risk

Approximately 237,000 $COMP tokens are already distributed between different addresses and can be calculated as a loss at the current moment.

Block Data Reference

The examples of transactions that trigger the bug:

https://etherscan.io/tx/0xc9244e53…2b0001

https://etherscan.io/tx/0xbc246c87…06422a

https://etherscan.io/tx/0xd77300cd…492f94

https://etherscan.io/tx/0xc9244e53…2b0001

https://etherscan.io/tx/0x0fefe4a1…3b45c1

https://etherscan.io/tx/0xf3731f0e…80a973

https://etherscan.io/tx/0xb6d5122a…dab7f2

https://etherscan.io/tx/0xf4bfef16…8a9f45

https://etherscan.io/tx/0xee318650…70bdb1

Comptroller contract:

https://etherscan.io/address/0x3d981921…c9cd3b

Reservoir contract:

https://etherscan.io/address/0x2775b1c7…009e38

List of addresses, which claimed a huge amount of tokens:

https://twitter.com/0xngmi/status/1443442885618278407

Incident Report

Protocol / Project Compound Labs

Date of Incident September 30, 2021

Attack Technique Other

Classification Borrowing and Lending

Primary Source View Post-Mortem #1 View Post-Mortem #2 View Post-Mortem #3 View Post-Mortem #4

Protocol Information

Protocol Type Exploit/Other

Affected Token COMP

Official Website compound.finance/

Protocol Twitter/X @compoundfinance

Team Anonymous

Source Code Unverified

Market Context at Time of Hack

Token Categories

DeFi Ethereum Ecosystem

Protocol Links

GitHub Discord Reddit

What the Attacker Needed to Succeed

Understanding the prerequisites for this type of attack helps auditors identify protocols that are most at risk and helps developers build better defenses.

Technical Knowledge Deep understanding of other and Solidity and EVM internals

Capital Required Seed capital to cover gas and initial position setup

On-Chain Access Ability to interact with smart contracts and deploy a custom exploit contract

Protocol Analysis Identification of the exploitable vulnerability in Compound Labs's contract logic - root cause: borrowing and lending

Execution Speed Precise transaction ordering and timing to exploit the vulnerability within a single atomic block

Obfuscation Plan A strategy to launder and move stolen funds - typically through mixers, cross-chain bridges, or decentralized DEX swaps to resist tracing

What Auditors Should Check

Could this have been caught in audit? Likely — with a thorough Other audit checklist and test coverage

If you're auditing a protocol with similar architecture to Compound Labs, these are the critical security checks that could have prevented this incident (September 2021).

Verify all logic paths related to Other are guarded by proper access controls and input validation
Review privileged functions (owner, admin, governance) for potential abuse vectors - centralization risks should be documented and bounded with timelocks or multi-sigs

Master these auditing techniques with hands-on labs and real exploit scenarios in the Smart Contract Hacking course.

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Sources & References

01
Source 1 https://archive.is/mj73m
02
Source 2 https://twitter.com/rleshner/status/1443380518498848768
03
Source 3 https://beincrypto.com/compound-finance-update-bug-distribution/
04
Source 4 https://www.coindesk.com/tech/2021/09/30/defi-money-market-compo…

Threat Assessment

Severity Level

HIGH

Attack Vector Other
Root Cause Borrowing and Lending
Year 2021

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