{"id":16143,"date":"2024-07-29T11:26:37","date_gmt":"2024-07-29T15:26:37","guid":{"rendered":"https:\/\/sikaoer.com\/compound-finance-faces-controversy-over-24-million-proposal\/"},"modified":"2024-07-29T11:26:37","modified_gmt":"2024-07-29T15:26:37","slug":"compound-finance-faces-controversy-over-24-million-proposal","status":"publish","type":"post","link":"https:\/\/sikaoer.com\/compound-finance-faces-controversy-over-24-million-proposal\/","title":{"rendered":"Compound Finance Faces Controversy Over $24 Million Proposal"},"content":{"rendered":"<p> <br \/>\n<\/p>\n<div>\n<h2>TLDR<\/h2>\n<ul>\n<li>Compound Finance passed a controversial proposal allocating $24 million worth of COMP tokens to a new vault<\/li>\n<li>The proposal was narrowly approved despite objections from many community members<\/li>\n<li>Critics argue this may be a \u201cgovernance attack\u201d by a group called the \u201cGolden Boys\u201d<\/li>\n<li>The proposal\u2019s main supporter, known as \u201cHumpy,\u201d has been involved in similar controversial actions with other DAOs<\/li>\n<li>This event has raised concerns about the vulnerability of DAO governance systems<\/li>\n<\/ul>\n<p>Compound Finance, a popular decentralized lending platform, is facing criticism after passing a controversial proposal that allocates 499,000 COMP tokens, worth about $24 million, to a new yield-bearing vault.<\/p>\n<p>The proposal, known as Proposal 289, was narrowly approved on July 28, 2024, sparking debate about the integrity of decentralized autonomous organization (DAO) governance.<\/p>\n<p>The proposal passed with a slim majority of 51%, receiving 682,191 votes in favor and 633,636 against. It was put forward by a group called the \u201cGolden Boys,\u201d led by a COMP token holder known as \u201cHumpy.\u201d<\/p>\n<p>The approved plan will move the tokens to a new vault controlled by this group, supposedly to provide additional yield for COMP holders.<\/p>\n<p>According to the proposal:<\/p>\n<blockquote>\n<p>\u201cWhen a user places COMP into the goldCOMP vault, the depositor receives goldCOMP, a semi-liquid wrapped token representing their initial deposit.\u201d The proposal claims these tokens can then be used to create \u201ca passive income stream for COMP holders who plan to hold COMP for a long period of time.\u201d<\/p>\n<\/blockquote>\n<p>However, many community members and experts have raised concerns about this development.<\/p>\n<p>Michael Lewellen, a security solutions architect at OpenZeppelin and advisor to Compound Finance, warned of a potential \u201cgovernance attack\u201d as early as May. Lewellen noted that the proposal \u201cwas not discussed prior in the forums and the delegate did not identify itself to the community prior to the proposal being created.\u201d<\/p>\n<p>Critics argue that the Golden Boys accumulated voting power through open market purchases, potentially undermining the principle of decentralized governance. The concern is that decisions may reflect the interests of a few powerful entities rather than the broader community.<\/p>\n<p>Omer Goldberg, CEO of Chaos Labs, a firm focused on DeFi security, commented that the proposal was \u201cpoorly communicated\u201d at best and potentially an attack happening in \u201cplain sight\u201d at worst. Goldberg emphasized, \u201cThe key lesson here remains clear: if the potential payoff exceeds the cost of exploitation, someone will attempt it.\u201d<\/p>\n<p>This isn\u2019t the first time Humpy has been involved in controversial DAO actions. In 2022, the Ethereum-based Balancer protocol struggled with similar proposals from Humpy. A Messari report described it as a \u201ccat-and-mouse game to control the whale\u2019s profit-seeking activity through governance.\u201d Humpy was also accused of attempting a governance attack on SushiSwap in March 2024.<\/p>\n<p>The passage of Proposal 289 has led to a drop in COMP\u2019s token price, which fell nearly 7% in the 24 hours following the vote. This decline suggests that the broader market views these developments negatively.<\/p>\n<p>In response to criticisms, Humpy defended the proposal, stating, \u201c\u2018Steal funds\u2019 is a wrongful & misleading phrase, especially coming from compound\u2019s risk specialist. Requested investment goes through a Trust Setup with a constraint set of actions that doesn\u2019t permit stealing\/diverting of funds.\u201d<\/p>\n<p>However, questions remain about the actual constraints on the Golden Boys\u2019 control over the new vault. Wintermute\u2019s governance account pointed out that \u201cAny form of withdrawal action (divest) is solely controlled by GoldenBoyzMultisig, meaning that the DAO cannot actually recall funds at any time under their own discretion.\u201d<\/p>\n<div class=\"a-wrap a-wrap-base a-wrap-6 a-wrap-bg\"> \n<\/div><\/div>\n<p><br \/>\n<br \/><a href=\"https:\/\/blockonomi.com\/compound-finance-faces-controversy-over-24-million-proposal\/\">Source link <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>TLDR Compound Finance passed a controversial proposal allocating $24 million worth of COMP tokens to a new vault The proposal was narrowly approved despite objections from many community members Critics argue this may be a \u201cgovernance attack\u201d by a group called the \u201cGolden Boys\u201d The proposal\u2019s main supporter, known as \u201cHumpy,\u201d has been involved in [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":16144,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"class_list":["post-16143","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-ethereum"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v20.6 (Yoast SEO v24.6) - 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