Summary
Ketju does not approve Compound v3: on-chain reserves show that the November 2025 deUSD loss breached the 0.5% bad-debt limit on both Ethereum stablecoin markets we held. The Compound Foundation never published the loss by market, so we read each Comet's reserves directly, before and after the incident. Ethereum USDC reserves fell $5,295,676.94, 1.049% of the market. Ethereum USDT reserves fell $1,430,743.34, 0.707%. Reserves should rise from interest over that window, and they fell. A drop in reserves is not certified bad debt, but its size, direction and timing are strong primary evidence. Governance had listed deUSD and sdeUSD as collateral on those markets, and deUSD fell about 98% after Stream Finance disclosed a $93M loss. The finding covers WETH too, because governance, the Pause Guardian and incident response are shared across all Comets. No one has exploited Comet's code; every realized loss came from a listing decision. Ketju will review Compound again if a full accounting shows the reserves were restored, or that the decline was not bad debt.
Review triggers
- Bad debt in any single Comet market exceeds 0.5% of that market
- On-chain accounting shows any single Ethereum Comet's November 2025 deUSD loss exceeded 0.5% of that market
- A proposal to list a new yield-bearing or wrapped stablecoin as collateral on a Comet we hold (deUSD came in this way; USDe and sUSDe are already listed)
- The Pause Guardian blocks withdrawals on a market we hold, and the pause lasts more than 72 hours
- Governance merges isolated markets or permits shared collateral, including any v4 design that pools collateral
- A base-asset market we hold falls below our liquidity minimum
- The ChainSecurity and Certora security provider misses its reporting schedule, or the DAO cuts the security budget again
Facts
- Verdict
- Not approved
- Type
- Dollar lending
- Chains examined
- Ethereum
- Instruments
- USDC, USDT, WETH
- Reviewed
- Last confirmed