DeFi platform Compound in a PR crisis
To take control of events and avoid being overwhelmed by a crisis in PR, companies must prioritize planning in order to ensure that every eventuality is covered.
An important part of a crisis plan is having a communication plan.
If a company is faced with a crisis, then how quickly it responds, how it communicates, and the messages it sends out can affect the company and its reputation more than the incident itself.
The ideal way to react to a PR crisis would be to respond as quickly and as effectively as possible and by doing so, to control the media agenda.
A crisis communication plan should include certain components. They are the plan, the communication process, the management team, and the post-crisis evaluation
Companies of all types have to deal with PR crises, and the cryptocurrency world is no exception. Even if a business is legit and offers quality crypto services, there is always the possibility of running into a crisis. Now more than ever, PR specialists play a crucial role in helping to revamp corporate reputations, particularly in the financial technology space. PR specialists are part of the information landscape, and their job is to make sure that information flows freely.
There had been a relatively recent error which tested PR disaster survival essentials. Compound protocol had placed comp tokens worth millions at risk due to a buggy system upgrade. It mistakenly gave out $90 million to users. The enormous payout was the result of a bug in an upgrade. Compound’s crypto token, comp, fell by 4.8% because of the glitch, but recovered quickly.
San Francisco-based Compound Labs is one of the several Decentralized Finance companies that regulators are trying to understand meaningfully . It develops a software called Compound, which removes human intermediaries from the financial landscape like brokers, depending on algorithms to execute transactions. The technology is relatively nascent, which opens up the possibility for such glitches.
DeFi protocols such as Compound recreate traditional financial systems such as banks and exchanges that use blockchains enriched with self-executing smart contracts. During a standard upgrade, it was evident that something had gone wrong as users started to receive millions of dollars in comp tokens. For instance, in one transaction $30 million worth of comp tokens were claimed.
A core developer at Compound, Yearn, billed this as the biggest-ever loss in funds by a company during a smart contract incident. Investors, however, didn’t seem to care all that much.
According to them there’s a lot to be learned from the incident. What acted as the palliative for it was the Comptroller contract. The Comptroller contract was the pool of cash that was open to be exploited. It had a finite number of tokens.
The founder of Compound, Robert Leshner, requested on Twitter that people return the cash. Two hours after his first Tweet, which seemed threatening to some, Leshner wrote an apologetic tweet still trying to appeal to users.
As a smart PR move, Compound made clear that no supplied or borrowed funds were at risk, which came as a consolation.
Some users returned the platform’s crypto tokens. Within five days, about 117,000 comp tokens or $38.7 million were returned. In jargon-filled businesses like crypto and block chain, tweets resemble human interaction and successfully give the impression of corporate transparency.
To take control of events and avoid being overwhelmed by a crisis in PR, companies must prioritize planning in order to ensure that every eventuality is covered. An important part of a crisis plan is having a communication plan. If a company is faced with a crisis, then how quickly it responds, how it communicates, and the messages it sends out can affect the company and its reputation more than the incident itself. The ideal way to react to a PR crisis would be to respond as quickly and…