As a seasoned financial analyst with extensive experience in the decentralized finance (DeFi) space, I find the recent developments surrounding Compound Finance and Proposal 289 deeply concerning. The narrow passage of this proposal, which allocates $24 million from Compound’s treasury to a yield-bearing protocol by the “Golden Boys,” has sparked accusations of manipulation and governance attacks.
The Compound Finance protocol, which operates on a blockchain, is facing examination following the close approval of Proposal 289. This proposal transferred 499,000 COMP tokens, approximately valued at $24 million from the protocol’s reserve, to a yield-generating protocol developed by the “Golden Boys” for a twelve-month period.
As an analyst, I’ve come across criticisms alleging that the approval of the proposal constituted a governance attack. These critics claim that a select group gained control by purchasing substantial amounts of COMP tokens on the open market. Notably, Michael Lewellen, a Compound security advisor, has highlighted suspicious connections between these token acquisitions and the Golden Boys’ proposals.
A number of community voices, such as Wintermute Governance, Columbia Blockchain, Penn Blockchain, and StableLab, have expressed doubts. They are questioning whether the “Trust Setup” for the investment, as asserted by Humpy, the presumed figurehead of the Golden Boys, can genuinely prevent misappropriation of funds.
Humpy argued in favor of the proposal, emphasizing that the “Trust Setup” is designed with preventative measures against misuse of funds. On the other hand, Wintermute’s governance account highlighted that the authority to approve withdrawals would lie with the “Golden Boys’ multisig,” rather than Compound DAO as a whole.
Bryan Colligan, the CEO of Compound’s Growth Team, voiced his disapproval of the proposal, pointing out that more profitable chances exist. Concurrently, the value of COMP tokens saw a decline of almost 7%.
Humpy’s history of getting embroiled in disputes, such as those with Balancer and SushiSwap, has fueled apprehensions. Previously, allegations arose that Humpy exploited governance mechanisms for personal advantage, an issue that resurfaces with Compound Finance.
The ongoing dispute raises doubts about the future direction of Compound’s governance and the trustworthiness of its procedures.
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2024-07-29 09:35