4 months ago
19 ARTICLE AD
Proposal 289 allocates 5% of Compound’s Treasury to a yield-bearing protocol designed by the Golden Boys.
Lending protocol Compound Finance has recently passed a proposal sparking claims of governance attack from community members who stated that a small group was able to extend its influence over the proposal after acquiring a large number of the COMP tokens from the open market.
Last week on July 28, Compound Finance passed proposal 289 with many on social media stating that a voting bloc called the “Golden Boys” has conducted a governance attack recently. Proposal 289 allocates 5% of Compound’s Treasury i.e. 499,000 COMP tokens worth about $24 million to a yield-bearing protocol designed by the Golden Boys. On Sunday, the proposal won with a narrow margin and a vote of 682,191 to 633,636.
In the Compound governance message boards, several insiders had already warned that such an event would occur just days before discussions. Golden Boys have been trying to push their agenda to gain control over Compound Finance’s governance over the past few months.
Earlier in May, compound Finance shot down a proposal dubbed “Treasury to Invest 5% of COMP holdings into goldCOMP Vaul”. Similarly, earlier this month in July, the bloc tried to push proposal 279 requesting a “one-year investment of 92,000 COMP be sent to the goldCOMP Treasury Fund”. However, the community turned this down as well. But it seems that the “Golden Boys” bloc succeded in getting through proposal 289.
How Did Golden Boys Bloc Get Compound Finance Governance in Control?
Michael Lewellen, a security advisor for Compound Finance, throws light on the recent development explaining how several accounts amassed the COMP tokens on the open market and several tokens intended to divert their COMP holdings toward the goldCOMP product. Apart from Lewellen, several community members from Compound Finance also raised similar concerns. with the passage of the proposal 289, Lewellen added:
“In my personal opinion, the actions of @Humpy and the Golden Boys can be considered a governance attack if they persist in their attempts to take funds from the protocol in clear opposition to the will of all other Compound DAO delegates.”
Following the passage of Proposal 289, the leader of the Golden Boys bloc defended the proposal rebuking Lewellen’s post. “‘Steal funds’ is a wrongful & misleading phrase, especially coming from the Compound’s risk specialist. Requested investment goes through a Trust Setup with a constraint set of actions that don’t permit stealing/diverting of funds,” Humpy claimed.
In the past, Humpy has been accused of involving in similar attempts to leverage the DAO governance process for making outsized gains. In 2022, the Ethereum-based Balancer (BAL) DeFi protocol was embroiled in a prolonged struggle with a whale known as Humpy. By accumulating a large vote share, Humpy was able to pass proposals unilaterally.
The conflict saw Humpy’s group utilizing multiple wallets to control over 50% of the vote share, leading to a power struggle that lasted several months. Eventually, both parties reached a peace treaty to resolve the issue.
