Compound Is About to Zero Out tBTC’s Risk Parameters After a Security Scare at Threshold Network

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• Compound’s on-chain Proposals 622 and 623 would cut tBTC’s supply caps and borrow collateral factors to zero across seven markets spanning Ethereum, Base and Arbitrum
• As of a November 4, 2026 update, the vote had reached quorum with 607,473 COMP in favor and zero against, with voting scheduled to close around November 5 at 17:16 UTC
• Roughly 101.5 tBTC, worth about $7.84 million, sits as collateral across 73 affected accounts, with a stress test showing a potential $1.38 million shortfall if tBTC’s value went to zero

Compound’s governance forum shows that an on-chain vote to effectively freeze tBTC as usable collateral across the protocol is on track to pass overwhelmingly, following a precautionary pause at Threshold Network, the protocol behind tBTC, a bridged bitcoin token. Threshold Network paused minting and redemption of tBTC after identifying a Linux kernel vulnerability, a precaution the protocol took without disclosing any confirmed exploit tied specifically to tBTC itself.

In response, risk manager Gauntlet put forward two linked on-chain proposals, numbered 622 and 623, targeting Compound’s Ethereum deployment and its Base and Arbitrum deployments respectively. Together, the proposals would cut tBTC’s supply caps and borrow collateral factors to zero across seven separate Compound markets, known internally as Comets, effectively preventing any new tBTC supply or borrowing against it while leaving existing positions in place.

A November 4, 2026 update posted to the proposal’s forum thread shows the vote has already cleared quorum, with 607,473 COMP tokens cast in favor and zero votes against, a lopsided result reflecting broad agreement within the DAO that tightening tBTC’s risk parameters is the prudent response. Voting is scheduled to close around November 5, 2026 at 17:16 UTC.

The forum post also details the scale of what is actually at stake: approximately 101.5 tBTC, worth roughly $7.84 million at current prices, sits as collateral across 73 affected accounts on Compound. Gauntlet’s own stress testing shows that in a worst-case scenario where tBTC’s value dropped to zero, the affected accounts’ total debt of approximately $23.16 million against that collateral could leave Compound with a shortfall of about $1.38 million, a relatively contained but non-trivial exposure that the parameter changes are designed to prevent from growing further.

The episode illustrates how a precaution taken by one protocol, without any confirmed breach, can still cascade into defensive risk-management actions at other protocols that rely on its token as collateral. The full proposal and vote tracking are posted on Compound’s own governance forum.