Compound shuts its Scroll USDC market: 1,959 borrowers with $13,901 of debt face absorption as Scroll's DeFi TVL falls to $7 million

What Compound is changing

Gauntlet's post on the Compound forum says it began deprecating the Scroll USDC market (a "Comet" in Compound terms) earlier this year by setting supply caps to zero and changing the interest rate curve. To wind it down completely and recover reserves, it recommends four parameter changes.

A position can be absorbed once its debt-to-collateral ratio is higher than the liquidation collateral factor. With that factor at 0.5%, almost any open borrow crosses the line. The borrow collateral factor goes to 0% because Compound requires it to sit below the liquidation factor, and it also stops new borrowing. The liquidation factor stays unchanged, which keeps the discount buyers get on seized collateral at 12% for WETH and 18% for wstETH. Gauntlet's reasoning: liquidity on Scroll is shrinking, and a meaningful discount helps seized collateral sell quickly so remaining suppliers can withdraw their USDC.

"The cause is Scroll, not market risk," the post says.

Who still has money in the market

Gauntlet's table, using collateral prices of $2,426 per WETH and $3,030 per wstETH as of November 4, shows how small and how scattered the remaining positions are.

Three things stand out. First, 1,571 accounts, 80% of the total, sit between 40% and 45% debt to collateral and hold about $5,300 of debt between them: roughly $3.39 each ($5,329 ÷ 1,571). Second, the 15% to 20% bucket holds about $7,500 of debt, which Gauntlet says comes almost entirely from a single position. Third, six tiny positions with about $19 of debt sit below 10%, the lowest at 0.95%. Clearing those is why the factor has to go as low as 0.5%.

The total debt excludes accrued interest. Gauntlet also puts the collateral at about 27.4 WETH and a small amount of wstETH.

DeFiLlama's data for Compound v3 shows the same scale from the outside: about $86,055 supplied and $18,054 borrowed on Scroll as of November 8. DeFiLlama's borrowed figure includes interest and uses current prices, so it does not match Gauntlet's November 4 table exactly.

What happens to a borrower who does nothing

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The post spells this out. When a position is absorbed, the borrower keeps the remaining equity, calculated as collateral value times the liquidation factor minus the debt, as a USDC supply balance they can withdraw. The collateral itself is sold through Compound's buyCollateral function.

Here is what that means with round numbers, using Gauntlet's formula. Suppose you supplied 1 WETH, worth $2,426 on Gauntlet's November 4 price, and borrowed $1,000 of USDC. Your debt-to-collateral ratio is about 41%, inside the bucket where most accounts sit. The WETH liquidation factor is not given in the post, only that it stays the same; so the exact equity left after absorption cannot be calculated from the sources we opened. What is certain is that you lose the liquidation penalty. If you repay the $1,000 first, you withdraw the whole 1 WETH.

Gauntlet's next steps are three lines:

• Borrowers should repay before execution to avoid the liquidation penalty.
• Suppliers and collateral-only accounts should withdraw. Accounts with collateral and no debt are not affected and can withdraw at any time.
• After execution, positions are absorbed and the seized collateral is sold.

The forum post gives no execution date. Compound Foundation's warning, as reported by PANews and Odaily, says all unpaid loans will face liquidation "within the coming weeks".

Why Scroll is going away as a public chain

The proposal on Scroll's governance forum, posted on November 3, asks the Scroll DAO to approve two things as a single vote: a transition to a "permissioned, application-specific network for private AI", and the migration of SCR to Ethereum mainnet. The Scroll Foundation would lead the implementation.

The proposal's own argument is about demand. It says running a technically strong general-purpose network "is not enough to guarantee durable demand", because applications, users and liquidity can move between chains while the network keeps paying for infrastructure. The new network would support Scroll's AI products, named in the proposal as Compass, Compass API, CENO, USX and SCR.

Key commitments in the text:

• SCR supply and overall tokenomics stay unchanged, and the migration "will not dilute existing SCR holders".
• SCR keeps its governance role and would extend to core parameters of USX, which the proposal describes as a US dollar-pegged stablecoin for pricing AI services and settling provider payments.
• The network upgrade is planned for year-end, with the detailed schedule to come through official Scroll channels.
• Users can review their holdings and DeFi positions at positions.scroll.io.
• Bridge support continues after the upgrade to the private network.

A Phemex News item dated October 30 reported the plan earlier with a Q2 2027 target, subject to governance approval. The November 3 forum text now says year-end. We use the forum date because it is the newer primary document.

Scroll's TVL, from $585 million to $7 million

DeFiLlama's chain series for Scroll peaked at about $585.5 million in October 2024. Sampled every 15 days since July, the decline is steady:

From the October 2024 peak to November 8, that is a fall of about 98.8% ($7.00M ÷ $585.5M = 1.2% left). Compound's Scroll market, at about $86,000 supplied, is around 1.2% of what is left on the chain.

SCR on exchanges

SCR is the token traders can actually act on. Public market APIs at 07:19 UTC (15:19 SGT) on November 8 showed:

The Scroll proposal says SCR moves to Ethereum mainnet with supply unchanged. It does not say how holders of SCR on Scroll itself will migrate, or whether exchanges will handle it for deposits they hold. That is the question to watch once the schedule is published. If you hold SCR on an exchange, check its announcements for deposit and withdrawal suspensions around the upgrade. If you hold SCR in a wallet on Scroll, keep watching the official Scroll channels for migration instructions and ignore links from anywhere else.

How to act on this

If you have funds on Scroll, work through this list now, while bridges and DeFi front ends still run:

1. Open positions.scroll.io, which the Scroll proposal names, and list every position you hold.
2. On Compound's Scroll market, repay any USDC borrow, then withdraw your WETH or wstETH. If you only supplied collateral, withdraw it.
3. Close positions in any other protocol on Scroll the same way: debts first, then collateral.
4. Bridge assets back to Ethereum or move them to an exchange that supports the network you are sending on. Send a small test amount first.

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What we could not confirm

• The date Compound governance will vote on or execute Gauntlet's changes.
• The unchanged liquidation factors for WETH and wstETH, so the exact equity a borrower keeps after absorption.
• The result of the Scroll DAO vote and the detailed upgrade schedule.
• How SCR held on the Scroll network will be migrated to Ethereum mainnet.
• Scroll's original post on X about the transition, which Gauntlet links but we did not open this run.

Quick answers

Will my Compound loan on Scroll be liquidated? Yes, if it is still open when Gauntlet's changes take effect. The proposal sets the liquidation collateral factor to 0.5%, which makes every remaining borrow absorbable. Repay first to avoid the penalty.

I only supplied collateral on Compound Scroll. Am I affected? Collateral-only accounts have no debt, so they are not absorbed. Gauntlet says they can withdraw at any time, and recommends that they do.

Is Scroll shutting down? A November 3 governance proposal would replace the public Scroll network with a permissioned, AI-focused network, with the upgrade planned for year-end. Bridge support continues after the upgrade, according to the proposal.

What happens to SCR? The proposal moves SCR to Ethereum mainnet with supply and tokenomics unchanged. Migration details for holders have not been published.