Over $1M in user funds on Compound fork Perfect Finance are frozen after code change error

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More than $1 million in user funds have been permanently locked in smart contracts that are part of Percent Finance, a fork of decentralized lending protocol Compound. 

According to an announcement post published by the development team behind the project on Wednesday night, the funds — which are made up of USDC, WBTC and ETH — are locked because of an unforeseen error that occurred when the team changed an interest rate parameter. This means users can no longer supply, borrow, repay or withdraw their assets.

The locked funds include 446,000 USDC, 28 WBTC and 313 ETH. 

In a Twitter thread published on Wednesday evening, the Perfect Finance team said the three frozen markets use an older version of an interest-bearing token on the platform, called CTokens. On November 4, Percent Finance tried to update these tokens to a newer interest model. But because the interest model formula and the old CToken code were incompatible, the tokens became locked, the team said. 

According to the thread, while the team has detected the error and can code for a new contract that will be compatible, the tokens from the old contract cannot be migrated over to the new contract. 

The Percent Finance team said it is in the process of reaching out to Circle and BitGo to help release the USDC and WBTC funds. A Circle spokesperson told The Block the Centre Consortium, which Circle and Coinbase co-founded, can only respond to a “valid, binding court-order from a competent US court that has authority over Centre.”

BitGo did not respond immediately to The Block’s requests for comment. 

The Percent Finance team has asked affected users to reach out for support via Discord. 

“Unfortunately, it seems the locked ETH may be irretrievable, but we are currently working on potential scenarios to make affected users whole,” the announcement said.

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May 5, 2022, 3:17PM UTC