Compound Finance Passes Controversial $24M Proposal
Compound Finance, a decentralized lending and borrowing protocol recently passed a proposal which has sparked controversies over a possible governance attack.
According to the community members, a small group led by COMP Whale known as “Humpy” allegedly amassed enough tokens on the open market to help narrowly pass their proposal over the objections of many community members.
Compound Finance Passes $24M Proposal
The proposal on the lending platform’s DAO governance forum passed narrowly on Sunday at 51% with a vote of 682,191 in favor and 633,636 against. It allocates 5% of Compound’s treasury, 499,000 COMP tokens worth about $24 million, to a yield-bearing protocol designed by a group called the Golden Boys.
The proposal whose voting began on Thursday and lasted through the weekend claims to provide holders with additional yield on their COMP tokens.
However, although the move is legal within the framework of the DAO’s rules, several community members and experts called out the passage by a vote from COMP token holders.
Community Expresses Disagreement Over Governance
Critics allege that the small group manipulated the voting process by acquiring large amounts of COMP tokens on the open market. Michael Lewellen, a security advisor for Compound Finance had warned of a potential governance attack taking place as early as May. He also pointed out connections between these token acquisitions and the Golden Boys’ proposals.
In response to Lewellen’s security alert, several community members including Wintermute Governance, Columbia Blockchain and Penn Blockchain echoed similar concerns, especially as the group made two additional attempts to pass its initial failed proposal.
“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,” Lewellen said.
Humpy, the apparent leader of the Golden Boys defended the proposal in a rebuke to Lewellen’s post claiming that the requested investment goes through a “Trust Setup” with a constraint set of actions that does not permit stealing or diverting of funds.
However, Wintermute Governance questioned the claim that the ‘Trust Setup’ actually prevented the diversion of funds. He highlighted that any withdrawal actions from the vault would be exclusively controlled by the GoldenBoyzMultisig, effectively delegating governance rights to the Golden Boys.
The post Compound Finance Passes Controversial $24M Proposal first appeared on Cointab.
