Compound Finance has reached an agreement with the pseudonymous crypto whale Humpy and his group, The Golden Boys, following a contentious governance dispute over Proposal 289. This proposal, which passed under controversial conditions, aimed to allocate $24 million worth of COMP tokens to a yield-bearing protocol managed by The Golden Boys.
Proposal 289 and Accusations of Governance Manipulation
The controversy erupted with the passage of Proposal 289 on July 28, which intended to increase the allocation of COMP tokens to the goldCOMP treasury fund from 92,000 to 499,000. Spearheaded by Humpy, the proposal sought to redirect $24 million from Compound’s treasury to a protocol managed by The Golden Boys, drawing significant criticism and allegations of vote manipulation. Critics argued that a small group had swayed the vote by purchasing large amounts of COMP tokens.
Community Concerns and New Staking Product Proposal
Michael Lewellen, a security advisor for Compound Finance, raised concerns about accounts amassing COMP tokens to influence votes favoring The Golden Boys’ goldCOMP product. Other community members, including Wintermute Governance, Columbia Blockchain, Penn Blockchain, and StableLab, echoed these concerns.
In response, Bryan Colligan from Compound announced in a forum post that Proposal 289 would be withdrawn to mitigate governance risks. Instead, a new staking product has been proposed to align with all parties’ interests, especially those of Humpy, a recent delegate and COMP holder. This new proposal aims to manage funds securely and benefit the community, distributing 30% of fresh token reserves generated annually to staked COMP holders, proportional to their stakes.
Community and Expert Endorsements
The new staking proposal, requiring a governance vote by the Compound DAO for on-chain deployment, has already received endorsements from Humpy, other Compound delegates, and security experts from OpenZeppelin and Gauntlet.
Resolution and Future Safeguards
Michael, who opposed Proposal 289, welcomed the resolution: “OpenZeppelin is happy to see a potential resolution to ensure governance is protected and community interests are served. We’ve been working closely with many community delegates since Proposal 289.”
Following this development, the automatic on-chain deployment of $24 million from Compound’s treasury was canceled, addressing concerns about The Golden Boys’ intentions and the security of the funds. The funds directed to the ‘Trust Setup’ contract, potentially unsafe under a multisig wallet controlled by The Golden Boys, were a significant issue.
Historical Context and Implications
Humpy has previously engaged in similar contentious actions with other DeFi protocols, such as Balancer and Sushi, accumulating substantial voting power to approve proposals favoring personal interests over the broader goals of the DAO. This agreement marks a crucial step in ensuring the integrity and security of Compound Finance’s governance framework while addressing the concerns of all involved parties.
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