By Pasha Bergman, CEO and co-founder of Woof, a Web3 infrastructure engineering devshop specializing in EVM development. This is what most protocols figure out too late.
Most protocols that come to us don't think they need outside help. The code runs, liquidations clear, nobody's filed a bug report. Compound's treasury was $1M short every month and nobody knew why until someone read the mempool. Woof Software's Pasha Bergman on what the right devshop finds when they look, and what 57% value recapture looks like when it lands.
The honest answer is: probably yes, and you likely don't know it yet. In volatile months, Compound DAO was losing over $1,000,000 through its liquidation mechanism, month after month. The DAO knew value was leaking and opened an RFP to fix it. Turning that into a working mechanism took an engineering team that could trace exactly where the money was going and build the fix end to end.
This is the kind of leak a serious engineering partner finds, and the kind protocols keep paying for when they never bring one in.
It works, why change?
When a position goes underwater in a standard lending protocol, bots race to liquidate it. To win that race, they run gas wars, paying up to 90% of their profit to validators just to land the transaction first. The protocol creates the entire opportunity. The DAO treasury sees $0 of it.
Nothing looks broken. The liquidations clear and the protocol functions. The leak is invisible unless someone specifically goes looking for it, which almost nobody does.
What a Good Engagement Looks Like
We traced this exact leak inside Compound's liquidation mechanism. The fix had to be structural.
We worked with Chainlink to deploy their Smart Value Recapture (SVR) solution and built the integration that let Compound switch to SVR-enabled price feeds. That replaced the public gas war with an Order Flow Auction: Chainlink's Dual Aggregator architecture routes liquidations through Flashbots MEV-Share, bots submit sealed bids, and whoever pays the protocol the most wins, not whoever burns the most gas.
We projected 40% value recapture. During heavy volatility in November 2025, the recapture rate hit 57%, and roughly 123 ETH landed in the DAO treasury in about 17 days.
How this was structured and approved on-chain: Chainlink SVR Onboarding on USDC Mainnet. The value was already there. It was just going to bots and validators instead of the treasury until someone went looking.
What a Serious Engineering Partner Does
- Finds leaks, not just bugs. Nothing has to look broken for value to be leaving the protocol.
- Brings real partnerships. Knowing the ecosystem well enough to work with Chainlink and get something shipped is different from knowing they exist.
- Ships the full mechanism. Production infrastructure built to hold when volatility spikes.
- Keeps ownership with the protocol. When we're done, it runs without us.
None of this requires your protocol to be broken. Compound's liquidations were clearing fine; governance was active and the code did exactly what it was supposed to do. What it wasn't doing was keeping the value it created, and that's the distinction most teams miss until someone external points at the mempool and shows them the number.
What Skipping It Actually Costs You
Up to 90% of liquidation profit going to bots and validators, month after month, on a mechanism that looks like it's working fine. The treasury is smaller than it should be and nobody knows why, because nothing has failed.
A serious engineering partner finds the value your protocol is already generating and gets more of it back where it belongs.
You lead the protocol. We build the infrastructure it runs on.
Want us to look for a leak like this in your protocol?
Free scope session for funded projectsBook a call directly with Pasha
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