Temporary Suspension of USDC Supply Transactions in Compound v2

03/11/2023 04:53 • Metaverse Matters • 106 views

On March 11, the compound government tweeted that due to the volatility of the USDC, the compound v2 Pause Guardian has temporarily disabled the USDC supply transactions in the compound v2. Users can still borrow, repay and withdraw USDC normally. Compound v3 has an upgraded risk engine, and currently runs without any problems.

Compound v2 temporarily disables the USDC deposit transaction, and users can still borrow, repay and withdraw the USDC normally

Analysis based on this information:

The recent tweet from the Compound government has announced that the Pause Guardian in Compound v2 has temporarily disabled USDC supply transactions due to the volatility of USDC. Even though this decision may impact some users, it is necessary to ensure the stability of Compound v2’s ecosystem. In this scenario, users can still borrow, repay, and withdraw USDC as usual.

Compound v2 is an Ethereum-based decentralized finance (DeFi) platform that allows users to lend and borrow cryptocurrencies. It relies on a network of smart contracts that automatically execute transactions, eliminating the need for intermediaries or centralized authorities. USDC is a stablecoin pegged to the US dollar, which means that it should be less volatile than other cryptocurrencies. However, recent market events, such as the GameStop stock frenzy and the COVID-19 pandemic, have caused significant fluctuations in USDC’s value, leading to its temporary suspension in Compound v2.

The Pause Guardian is a smart contract that monitors Compound v2’s risk parameters and prevents them from being breached. By temporarily disabling USDC supply transactions, the Pause Guardian is reducing the risk of liquidation and maintaining the stability of Compound v2’s money market. Compound v3, on the other hand, has an upgraded risk engine that can handle the current level of volatility without any problems. Therefore, Compound v3 is not affected by the temporary suspension of USDC supply transactions.

In conclusion, the temporary suspension of USDC supply transactions in Compound v2 is a precautionary measure aimed at reducing the platform’s risk exposure. It shows that even DeFi platforms as reputable as Compound need to adjust their risk parameters in response to market events. Users can still use USDC on Compound v2, but they cannot supply it for the time being. Compound v3 remains fully operational and is a preferred alternative for users who wish to lend or borrow USDC in a volatile market.

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