TL;DR
- Golden Boys and Governance Controversy: Compound Finance, a decentralized lending and borrowing protocol, is embroiled in a governance scandal. The “Golden Boys” group is at the center of the controversy, with allegations of a governance attack.
- Failed Proposals and Community Concerns: Earlier proposals related to creating a wrapped COMP token called “GoldCOMP” faced rejection due to insufficient votes. Despite these failures, concerns persisted about the Golden Boys’ control over funds.
- Proposal 289 and Precautionary Measures: Proposal 289, which significantly increased COMP allocation for the goldCOMP treasury, narrowly passed. In response, Proposal 290 aims to prevent similar situations by transferring governance rights.
Compound Finance, a prominent decentralized lending and borrowing DeFi protocol, finds itself embroiled in a governance scandal that has raised eyebrows across the crypto community. The controversy centers around a contentious proposal and the actions of a group known as the “Golden Boys.”
The saga began with discussions on Compound’s governance forums, where insiders had already expressed concerns about potential governance issues. On May 6, Compound Governance rejected Proposal 247, titled “Treasury to Invest 5% of COMP holdings into goldCOMP Vault,” citing insufficient votes.
This proposal aimed to create a wrapped COMP token called “GoldCOMP,” managed by the Golden Boys and funded by COMP. The goal was to provide a new avenue for passive income to COMP holders through a Balancer pool.
Yet, Proposal 279 met the same outcome when it was voted on July 19. This revised version aimed to allocate 92,000 COMP for a one-year investment in the goldCOMP Treasury Fund.
Despite its failure, concerns persisted. Members of the community, including the Wintermute Governance bloc, worried that the proposal would grant the Golden Boys excessive control over the funds.
Compound Finance’s Governance Attack Allegations
Wintermute Governance pointed out a critical issue: any withdrawal actions from the vault would be exclusively controlled by the GoldenBoyzMultisig. In effect, this delegated governance right raised suspicions of a governance attack.
Michael Lewellen, part of the OpenZeppelin bloc, warned that the Golden Boys’ actions might indeed constitute such an attack if they persisted against opposition from other DAO delegates.
Proposal 289 and Escalation
The controversy reached a boiling point on July 28 when Proposal 289, introduced by the Golden Boys, narrowly passed with 682,191 votes in favor and 633,636 against. This proposal significantly increased the COMP allocation requested for the goldCOMP treasury—from 92,000 to 499,000 COMP. The implementation is scheduled for July 30.
In response, Proposal 290 emerged: “Precautionary Transfer of Timelock Admin.” This proposal suggests transferring the Compound Governance Timelock Admin to “CommunityMultiSig” to prevent similar proposals from gaining traction. Critics argue that this measure may be too little, too late.
The 499,000 COMP requested in Proposal 289, valued at approximately $24.1 million, will soon find its way into the goldCOMP treasury fund. Meanwhile, Compound Finance faced another challenge earlier this month when its website fell victim to a hijacking incident, as reported by crypto investigator ZachXBT.
As the crypto world watches closely, Compound Finance grapples with governance turmoil, leaving many wondering about the future implications for decentralized protocols and their communities.
