Compound Finance has brokered a truce with the pseudonymous crypto whale Humpy and his group, The Golden Boys, following a heated governance dispute over Proposal 289.
This proposal, passed under contentious conditions, sought to allocate $24 million worth of COMP tokens to a yield-bearing protocol managed by The Golden Boys.
The proposal faced criticism for manipulation by a small group buying large amounts of COMP tokens. The new offer suggests a staking product to align with all parties’ interests, particularly addressing Humpy’s needs as a delegate and COMP holder.
Controversy Surrounds Proposal 289 and Alleged Governance Attack by the Golden Boys
Compound Finance, a leading decentralized lending and borrowing protocol, is embroiled in controversy over a possible governance attack.#Compound #DeFihttps://t.co/kaT1l5vypU
— Cryptonews.com (@cryptonews) July 29, 2024
The controversy began with the passage of Proposal 289 on July 28, which led to accusations of a governance attack perpetuated by the Golden Boys.
This proposal, which passed with 682,191 votes in favour and 633,636 against, sought to increase the amount of COMP tokens allocated to the goldCOMP treasury fund from 92,000 to 499,000.
Proposal 289, spearheaded by Humpy, aimed to allocate $24 million from Compound’s treasury to a yield-bearing protocol managed by The Golden Boys.
The proposal passed under contentious circumstances, sparking widespread criticism and allegations of vote manipulation. Critics argued that a small group had swayed the vote by purchasing large amounts of COMP tokens on the open market.
Michael Lewellen, a security advisor for Compound Finance, raised concerns on X about several accounts amassing COMP tokens to influence proposals favouring the Golden Boys’ goldCOMP product.
Other community members, including Wintermute Governance, Columbia Blockchain, Penn Blockchain, and StableLab, echoed these concerns, noting the group’s repeated attempts to pass a previously failed proposal.
In a new forum post by Bryan Colligan at Compound, it was announced that Proposal 289 would be withdrawn to mitigate the governance risks it posed.
Instead, a new staking product has been proposed, aiming to align with the interests of all parties involved, especially Humpy, a recent delegate and COMP holder.
The new staking proposal aims to ensure that the funds are managed securely and in the best interest of the community.
The proposed staking product intends to enhance the utility of COMP tokens by distributing 30% of the fresh token reserves generated annually to staked COMP holders. This distribution will be proportional to the amount of COMP staked by each holder.
Although this proposal will require a governance vote by the Compound DAO for on-chain deployment, it has already received endorsements from Humpy, other Compound delegates, and security experts from OpenZeppelin and Gauntlet.
Proposal 289 Opponent Michael Welcomes Resolution to Protect Compound Governance
Michael, who opposed Proposal 289, stated: “OpenZeppelin is happy to see a potential resolution on the table to ensure governance is protected and community interests are served. We’ve been working closely with many community delegates since Proposal 289.”
Following this development, the automatic on-chain deployment of $24 million from Compound’s treasury was cancelled, as shown by on-chain data.
Concerns had been raised about The Golden Boys’ intentions, emphasizing their repeated attempts to divert funds to their product, goldCOMP. This suspicion was heightened by their history of making two previous proposals rejected by the Compound DAO.
Another significant issue was the security of the funds once they were transferred from Compound. There were worries that the funds directed to the ‘Trust Setup’ contract could be unsafe, as they would be controlled by a multisig wallet owned by The Golden Boys.
Humpy has previously engaged in similar contentious actions with other DeFi protocols, such as Balancer and Sushi. In these cases, Humpy accumulated substantial voting power to approve proposals, potentially favouring personal interests over the broader goals of the DAO.
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