Compound Finance have passed a proposal to restrict the maximum borrowing of 10 tokens on the protocol. The proposal put forth by financial modelling firm Gauntlet passed Nov. 28 by majority vote.
Tokens such as Uniswap and COMP had their borrow limits slashed from 11.25 million and 150,000 to 550,000 and 18,000, respectively. Other less liquid altcoins on Compound were also affected, such as Yearn.finance , which had its borrow cap reduced from 1,500 to just 20. Wrapped Bitcoin ,which previously had no borrow limit on Compound, has been slapped with a lending ceiling of 1,250.
According to Gauntlet, the proposal would prevent insolvency risk from liquidation cascades, price manipulation Mango squeeze exploits, risk of high utilization and risk from shorting assets from a short position on Compound of significant size relative to the circulating supply of the asset. Although the related incident was not directly referenced, Gauntlet also conducted modeling and risk assessment for DeFi lending protocol Aave.
