The governance structure of Compound Finance has come under scrutiny following the controversial approval of Proposal 289. This proposal, passed by a narrow margin, involves the allocation of 499,000 COMP tokens, valued at approximately $24 million, from the protocol's treasury to a yield-bearing protocol orchestrated by the 'Golden Boys.' The proposal increase in COMP token requests for the goldCOMP treasury has sparked debates and accusations of governance manipulation.
Allegations and Response
Critics have accused a specific group of manipulating the voting process by acquiring significant COMP token amounts, leading to concerns of a governance attack. Michael Lewellen, a security advisor at Compound, highlighted correlations between these token acquisitions and the 'Golden Boys' initiatives. The primary objective of the proposal was to introduce a wrapped COMP token, 'GoldCOMP,' managed by the Golden Boys in a distinct treasury funded by COMP tokens.
Community Concerns and Backlash
Community members expressed concerns over the substantial depletion of Compound Finance's treasury, allegedly facilitated by a notable COMP holder dubbed 'Humpy.' 'Humpy' defended the action as providing additional passive income for COMP holders, allowing investments and divestments at the discretion of the Golden Boys. The redirection of 499,000 COMP tokens, valued at around $25 million, by 'Humpy' raised eyebrows in the DeFi sector.
The latest proposal introduced a 'Trust Setup' for the Golden Boys multisig to oversee investments, divestments, and rewards with Compound Governance's approval. Although compliant with the DAO's regulations, the move faced criticism from various stakeholders and community members after COMP token holders voted in favor.
Implications and Defense
The approval of Proposal 289 set an implementation date of July 30, signifying potential changes in the governance structure. Proposal 290, proposing the transfer of Compound Governance Timelock Admin to 'CommunityMultiSig,' could impact future decision-making processes.
In response to criticisms, the Golden Boys, particularly 'Humpy,' defended their actions, denying allegations of fund misappropriation. Nevertheless, some multisig members claimed unawareness of the vote, suggesting internal discrepancies within the group.
Compound's token price experienced a decline following the proposal's passage, following an earlier compromise of Compound Finance's frontend in July.
