This appears to be a DAO 2.0. A smart contract that is functioning as it was programmed to be, however, coded with a loophole where someone can use to
cheat the program.
However, is it
cheating if it is functioning in the purpose it was programmed to? The question of the DAO.
Robert Leshner, founder of CompoundAn exploit on Compound is allowing users to leverage their initial capital multifold, creating more Compound DAI than real DAI, and a situation that some are terming impossible.
This is not a security lapse or bug in the Compound protocol, but a sneaky loophole that makes borrowing against borrowed collateral possible.
DeversiFi COO Daniel Yanev noted on a tweet Friday that on-chain DAI was just 108 million, compared to Compound DAI that’s more than 3x the value:
Thread commentator @degenspartan explained the situation arises as a user immediately deposits the DAI they borrow “which becomes collateral so [they] can borrow more DAI,” which in turn, can be further pooled to gain collateral on.Source https://cryptoslate.com/this-compound-exploit-allows-users-to-4x-their-initial-capital-using-their-borrowed-amounts/
