Compound governance handed a proposal to mobilize $24 million value of COMP to Humpy’s goldCOMP vault, however critics say foul play is afoot.
Compound tokenholders have handed a controversial governance proposal regardless of analysts warning in opposition to a concerted governance assault.
On July 28, Proposal 289 handed with 51.84% of votes forged in favor in comparison with 48.16% in opposition to after voting started on July 25. The proposal advocated for investing 499,000 COMP (roughly $24 million) from Compound’s treasury into the goldCOMP DeFi vault from the “Golden Boys” group.
Vault depositors obtain goldCOMP, a “semi-liquid wrapped token” representing their property — which may be offered to a liquidity pool to generate yields.
“These goldCOMP tokens… creat[e] a passive income stream for COMP holders who plan to COMP for a long period of time,” Proposal 289 stated. “The proposal seeks a one-year investment of 499,000 COMP of treasury funds… to generate interest on 5% of the treasury’s non-interest bearing COMP holdings.”
The proposal’s passage notably adopted two beforehand unsuccessful makes an attempt to allocate Compound treasury funds to the goldCOMP vault.
“It is fair to say that Humpy and the Golden Boys are operating in bad faith,”stated Michael Lewellen of the web3 safety agency, OpenZeppelin. “Their attempt to push through a proposal to take a large chunk of the Compound treasury without adequate protections appears to be a malicious attempt to steal funds from the protocol. In my personal opinion, the actions of Humpy and the Golden Boys can be considered a governance attack.”
The value of COMP is down 5.6% up to now 24 hours, in accordance with CoinGecko.
Humpy
Proposal 289 has attracted widespread pushback from throughout the Compound group, with detractors claiming the undertaking has come beneath siege from a governance assault.
The Golden Boys are led by Humpy, a controversial whale beforehand accused of shopping for the governance tokens of varied DeFi protocols to vote for measures that serve their private monetary pursuits on the expense of the token’s issuing undertaking.
In 2022, Humpy got here beneath hearth for amassing an outsized share of vote-escrow Balancer tokens (veBAL) — which permits holders to vote on how newly minted BAL emissions are distributed throughout liquidity swimming pools on the Balancer decentralized alternate. The scenario resulted in Humpy accumulating $1.8 million value of BAL from Balancer’s CREAM/WETH liquidity pool over six weeks, whereas the Balancer protocol generated solely $18,000 value of protocol payment income over the identical interval.
Humpy was additionally embroiled inSushi’s current infighting because the Sushi DAO sought to withstand efforts from the undertaking’s core operations to instill a centralized governance and improvement construction. Sushi’s head chef accused Humpy of aligning voting energy with a bunch of disaffected group members referred to as SushiCitizen in a bid to introduce a vote escrow tokenomics and ramp up inflation for their very own achieve.
Backlash
On Might 7, Lewellen responded to the unique Golden Boys’ Proposal 247, publishing a warning noting that 247 was launched with out prior dialogue by a beforehand unknown governance delegate.
The proposal requested 92,000 COMP for the goldCOMP vault and got here days after its creator was delegated greater than 228,000 COMP in voting energy originating from the Bybit alternate held by simply 5 wallets. Mixed with the delegate’s funds, the group managed 325,333 COMP — equating to greater than 81% of the 400,000 COMP required for a governance proposal to satisfy quorum.
“We alerted the community of the risk that these delegates could be in support of a potential governance attack,” Lewellen stated. “The timing of the new proposal and these recent delegations is suspicious.”
The warning stirred up vital pushback, with 88% of practically 807,000 votes in opposition to proposal 247, prompting Humpy to announce the cancellation of the proposal.
Golden Boys adopted up with Proposal 279 on July 15, with voting commencing two days later. Wintermute, a crypto buying and selling agency, recognized safety considerations concerning the proposal. Wintermute famous that the GoldenBoyzMultisig exercised unique management over withdrawal actions, including that any deposited funds additionally delegated governance rights to the identical multisig account — giving the delegate and related greater than 400,000 COMP in governance energy.
“Any form of withdrawal action… is solely controlled by GoldenBoyzMultisig, meaning that the DAO cannot actually recall funds any time under their own discretion,” Wintermute stated. “Even if the DAO wanted to withdraw funds, there is a possibility that it gets voted down.
Bryan Colligan, the head of business development at Compound, also noted that his team was already exploring opportunities for generating yield on protocol-owned liquidity (POL) that offer higher returns than 5%.
“Security concerns aside, from our early analysis there are much better POL opportunities available leveraging partnerships from emerging chains and dexes available,” Colligan stated. “Most of these opportunities we are evaluating are starting at 15-20% APR, and some as high as 40%.”
Proposal 279 failed, with 83% of votes forged in opposition to it.
Proposal 289
Proposal 289 was created on July 24, with voting set to start two days later.
Lewellen flagged that the proposal’s timing appeared meant in order that voting would happen over the weekend — when many group members could also be much less energetic. As such, Lewellen characterised the proposal as a governance assault aimed toward having access to Compound’s treasury reserves with out present process correct scrutiny from the undertaking’s group.
Lewellen additionally warned that the proposal upped the requested sum of COMP by greater than 600% to 499,000 COMP and failed to deal with all the criticisms levied in opposition to the earlier proposals.
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