DeFi
Achieving Its Strongest Financial Quarter to Date, Operating Revenues up to a Record C$13.4 Million, Operating Net Income of C$5.3 Million, and Notable Strategic Developments
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Record Operating Revenues and Net Income: DeFi Technologies recorded its strongest quarter ever, achieving Operating Revenues of C$13.4 million and Operating Net Income of C$5.3 million for Q1 2024.
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Strategic Advancements and Product Launches: The quarter featured the launch of multiple Exchange Traded Products (“ETPs“) by subsidiary Valour Inc, and Valour Digital Securities Limited (together, “Valour“) alongside strategic acquisitions such as Reflexivity Research LLC, significantly enhancing the company’s product offerings and market position.
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Substantial Growth in Assets Under Management (AUM): AUM grew by 78.7% to approximately C$908 million, driven by favorable market conditions, new product launches, and strategic corporate actions that enhanced trading volumes and overall financial performance.
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2024 Outlook: Looking ahead, DeFi Technologies projects its annualized Operating Revenues to reach approximately C$119 million (US$87.45 million) for 2024, supported by ongoing AUM growth, upcoming ETP launches, and the integration of new acquisitions, which are poised to capitalize on the favorable conditions in the digital asset sector.
TORONTO, May 15, 2024 /PRNewswire/ – DeFi Technologies Inc. (the “Company” or “DEFI“) (CBOE CA: DEFI) (GR: R9B) (OTC: DEFTF), a financial technology company and the first and only publicly traded company that bridges the gap between traditional capital markets, Web3 and decentralised finance, announces its financial performance for the three months ended March 31, 2024 (all amounts in Canadian dollars, unless otherwise stated).
DeFi Technologies Logo (CNW Group/DeFi Technologies Inc.)
Key Highlights of Q1 2024:
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The Company reported a cash balance as of March 31, 2024 of $9.4 million compared to $6.7 million on December 31, 2023.
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The Company’s venture portfolio investments were valued at $41.8 million as of March 31, 2024.
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AUM grew 78.7% to approximately $908 million as of March 31, 2024, up from $508 million as of December 31, 2023.
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Total Operating Revenues were $13.4 million for Q1 2024. This is a significant improvement from the Operating Revenues of $(3.6) million for the same period in 2023. Total Revenues were $(4.9) million for Q1 2024, compared to $(11.3) million for the same period in 2023. Operating, general, and administration costs for Q1, 2024 were $3.0 million, up from $2.1 million for the same period in 2023.
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DeFi Technologies’ Subsidiary Valour Inc. announced the launches of a Physical Backed Staking ETP for the Internet Computer Protocol (ICP) Token, Valour Ripple (XRP), Valour Binance (BNB) ETPs, and the 1Valour STOXX Bitcoin Suisse Digital Asset Blue Chip ETP. Valour Inc. also announced plans to launch a Physical Backed ETP, the Valour HBAR Staking ETP in collaboration with The Hashgraph Association (“THA“)
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DeFi Technologies Inc. Completed the Acquisition of Private Research Firm, Reflexivity Research LLC, Co-Founded by Anthony Pompliano and Will Clemente
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DeFi Technologies Inc. Completed Strategic Acquisition of Leading Solana Trading Systems IP
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DeFi Technologies Announced Inaugural Bitcoin Investor Day Hosted by Subsidiary Reflexivity Research
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DeFi Technologies Joined Coinbase and Grayscale in a Panel Discussion at Bitcoin Investor Day, Moderated by Anthony Pompliano
“Q1 2024 stands as our most successful quarter ever, marking a period of remarkable achievement and financial strength for DeFi Technologies,” stated Olivier Roussy Newton, CEO of DeFi Technologies. “This quarter is a testament to our resilient financial performance, reflecting an impressive 78.7% growth in assets under management and a record Operating Revenue of C$13.4 million. Our success this quarter is not just in numbers, but also in strategic advancements, exemplified by significant enhancements in our product offerings and the strengthening of our market position through key partnerships and acquisitions.
At DeFi Technologies, we are constantly evolving to meet our ambitions while keeping a sharp focus on our strategic and financial goals. This quarter’s results highlight the effectiveness of our approach and underscore our commitment to excellence and leadership in the regulated digital asset market. Our achievements this quarter set a new benchmark for us, reinforcing our dedication to being at the forefront of innovation in the financial technology sector.”
ETPs/Valour:
Valour’s ETP business reported assets under management (“AUM“) of $908 million as of March 31, 2024, a 78.7% increase from December 31, 2023 AUM of $508 million.
Liquidity:
The Company ended Q1 2024 with a cash balance of $9.4 million, compared to $6.7 million at the close of 2023. Additionally, the venture portfolio investments stood firm at $41.8 million.
Financial Performance:
For the three months ending March 31, 2024:
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Operating Revenues were $13.4 million for Q1 2024, compared to $(3.6) million for the same period in 2023. Revenues were $(4.9) million for Q1 2024 compared $(11.3) million in 2023. Increased staking and lending, management fees and new revenue from its recently acquired Reflexivity LLC helped improve the 2024 revenues.
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Operating Net Income was $5.3 million for Q1 2024 compared to $(8.7) million for the same period in 2023. Net income was $(18.0) million, compared with net income of $(16.5) million million during the same period in 2023.
Outlook for 2024:
The outlook that follows supersedes all prior financial outlook statements made by the Company, constitutes forward-looking information within the meaning of applicable securities laws, and is based on a number of assumptions and subject to a number of risks. Actual results could vary materially as a result of numerous factors, including certain risk factors, many of which are beyond the Company’s control. Please see “Cautionary note regarding forward-looking information” and “Financial Outlook Assumptions” below for more information.
The Company has experienced significant revenue growth since the end of 2023, continuing rapidly through the first quarter of 2024. Valour’s ETPs have witnessed a nearly 800% increase in AUM from the market lows in late 2022, alongside growth in trading volumes. As of March 31, 2024, Valour’s AUM stood at approximately C$908 million (US$670 million), with daily trading volumes exceeding C$20.3 million (US$15 million).
The Company’s staking and lending income, changes in gains and losses on digital assets and ETP payables, as well as management fees, are closely correlated with capital inflow for Valour’s ETPs and the price of digital assets underlying Valour’s ETPs, which has grown substantially in the last few months. Furthermore, revenue from arbitrage and liquidity provision is highly linked to overall market activity and turnover in Valour’s listed ETPs. Given the current AUM, price of digital assets and activity level in the digital asset market, the Company’s annualized Operating Revenue is forecasted to be approximately C$119 Million (US$87.45 million) for 20241. Further growth in AUM may lead to proportional increases in Operating Revenue. Since there is a strong correlation between the Company’s Operating Revenues and the digital asset market’s price levels and activity, Operating Revenue trajectories will fluctuate with market conditions while costs remain relatively stable, reflecting Valour’s business’ scalability.
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1 This projection is based on the assumption that no new ETPs are introduced and that AUM remains constant at current levels throughout 2024. Should AUM increase, revenues are expected to rise accordingly; conversely, a decrease in AUM would lead to a reduction in revenues. |
For Q2 2024, it is anticipated that new ETP launches, improved ETP mix and continuous inflow of funds into Valour’s ETPs and accretive acquisitions of the Company, will more than compensate for the decrease in prices of digital assets. In addition to the Company’s existing business units, a new alpha-generating business (“DeFi Alpha”) unit was formed in Q2 2024 in order to generate yield on the Company’s excess liquidity. The focus is on arbitrage trading opportunities in the digital asset space with low risk in both centralized and decentralized markets (with minimal market or protocol exposure), thereby minimizing downside revenue volatility. DeFi Alpha has come off to a promising start, generating approximately US$40 million thus far in 2024.
Furthermore, the continuous improvement in Valour’s ETP mix is a crucial driver of monetization levels. The ETP business aims to maximize AUM through increased ETP launches and geographical expansion. The Company maintains its plans to launch approximately 15 ETP products in 2024 and an additional 30 in 2025 as the Company continues to take advantage of extremely positive macro fundamentals for the digital asset ecosystem in general.
Non-IFRS and Other Financial Measures
To supplement the Company’s consolidated financial statements, which are prepared and presented in accordance with IFRS Accounting Standards (“IFRS“), the Company uses certain non-IFRS and other financial measures to provide additional information in order to assist investors in understanding our financial and operating performance. These measures are not recognized measures for financial presentation under IFRS do not have standardized meanings, and may not be comparable to similar measures presented by other public companies.
Operating Revenue is a non-IFRS financial measure that excludes the one-time effect of the adjustment in the value the BTC collateral held by Genesis Global Capital LLC (“Genesis“) to $9,050,472, being the fair value of the loan and interest held with Genesis (the “Genesis Adjustment“). Due to the ongoing bankruptcy related to Genesis, the Company is adjusting the BTC collateral position to the value of the loan and interest held at Genesis in accordance with the principles of IFRS. The Company continues to monitor and participate in the Genesis proceedings to determine the magnitude of the expected recovery as the proceedings progress.
Operating Net Income is a non-IFRS financial measure that excludes the Genesis Adjustment and the one-time effect of the impairment loss of $4,953,021 as a result of its acquisition on February 9, 2024 of intellectual property tailored to support the Solana-focused trading desk operated by the Company. At the time of acquisition, the intangible assets were in an early stage of research and development, with significant uncertainties surrounding its future market demand, sales price and production costs, and as such, the full amount was impaired.
These foregoing adjustments are non-IFRS measures, and the Company believes that they provide a focused view of its operational performance. The reconciliation of these adjustments helps stakeholders understand the impact of non-cash items on the Company’s financial results. The non-IFRS and other financial measures used herein be considered as a supplement to, and not a substitute for, or superior to, the corresponding measures calculated in accordance with IFRS. See the financial tables below for a reconciliation of the non-IFRS measures.
DeFi Technologies Inc. |
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Reconciliation from IFRS to Non-IFRS Results |
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(Expressed in Canadian dollars) |
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Three months ended March 31, |
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2024 |
2023 |
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$ |
$ |
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IFRS total revenue |
(4,922,567) |
(11,344,052) |
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Bitcoin collateral held by Genesis Global Capital LLC |
18,333,545 |
7,755,294 |
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Adjusted total revenue |
13,410,977 |
(3,588,758) |
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IFRS net loss |
(18,041,756) |
(16,478,354) |
|
Bitcoin collateral held by Genesis Global Capital LLC |
18,333,545 |
7,755,294 |
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One-time effect of impairment loss of its acquisition of Solana IP |
4,962,021 |
– |
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Adjusted net income (loss) |
5,253,809 |
(8,723,060) |
About DeFi Technologies
DeFi Technologies Inc. (CBOE CA: DEFI) (GR: R9B) (OTC: DEFTF) is a financial technology company that pioneers the convergence of traditional capital markets with the world of decentralized finance (DeFi). With a dedicated focus on industry-leading Web3 technologies, DeFi Technologies aims to provide widespread investor access to the future of finance. Backed by an esteemed team of experts with extensive experience in financial markets and digital assets, we are committed to revolutionizing the way individuals and institutions interact with the evolving financial ecosystem. Join DeFi Technologies’ digital community on Linkedin and Twitter, and for more details, visit https://defi.tech/
About Valour
Valour Inc. and Valour Digital Securities Limited (together, “Valour“) issues exchange traded products (“ETPs”) that enable retail and institutional investors to access digital assets like Bitcoin in a simple and secure way via their traditional bank account. Valour is part of the asset management business line of DeFi Technologies Inc. (CBOE CA: DEFI) (GR: R9B) (OTC: DEFTF).
In addition to their novel physical backed digital asset platform, which includes 1Valour Bitcoin Physical Carbon Neutral ETP, 1Valour Ethereum Physical Staking, and 1Valour Internet Computer Physical Staking, Valour offers fully hedged digital asset ETPs with low to zero management fees, with product listings across European exchanges, banks and broker platforms. Valour’s existing product range includes Valour Uniswap (UNI), Cardano (ADA), Polkadot (DOT), Solana (SOL), Avalanche (AVAX), Cosmos (ATOM), Binance (BNB), Ripple (XRP), Toncoin (TON), Internet Computer (ICP), Chainlink (LINK) Enjin (ENJ), Valour Bitcoin Staking (BTC), Bitcoin Carbon Neutral (BTCN), Valour Digital Asset Basket 10 (VDAB10) and 1Valour STOXX Bitcoin Suisse Digital Asset Blue Chip ETPs with low management fees. Valour’s flagship products are Bitcoin Zero and Ethereum Zero, the first fully hedged, passive investment products with Bitcoin (BTC) and Ethereum (ETH) as underlyings which are completely fee free.
For more information on Valour, to subscribe, or to receive updates and financial information, visit valour.com.
About Reflexivity Research
Reflexivity Research LLC is a leading research firm specializing in the creation of high-quality, in-depth research reports for the bitcoin and digital asset industry, empowering investors with valuable insights. For more information please visit https://www.reflexivityresearch.com/
Cautionary note regarding forward-looking information:
This press release contains “forward-looking information” within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to the financial results of the Company; Operating Revenue outlook of the Company; revenue generation by DeFi Alpha; future collaborations and partnerships; development of ETPs; the regulatory environment with respect to the growth and adoption of decentralized finance; the pursuit by DeFi Technologies and its subsidiaries of business opportunities; and the merits or potential returns of any such opportunities. Forward-looking information is subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company, as the case may be, to be materially different from those expressed or implied by such forward-looking information. Such risks, uncertainties and other factors include, but is not limited the acceptance of Valour exchange traded products by exchanges; growth and development of DeFi and digital asset sector; rules and regulations with respect to DeFi and digital asset; general business, economic, competitive, political and social uncertainties. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.
Financial Outlook Assumptions
The financial outlook on Operating Revenue of the Company is based on a number of assumptions, including assumptions related to inflation, changes in interest rates, volatility of the digital asset market, current and projected market prices of digital assets, in particular the digital assets underlying the Company’s ETPs, the Company’s ability to realize staking and lending income from digital assets held by the Company, the ability of DeFi Alpha to generate yield on the Company’s excess liquidity, the return realized by the Company on staking and lending income, the return on management fees earned by the Company, ongoing subscriptions of Reflexivity Research, consumer interest in the Company’s ETPs, foreign exchange rates and other macroeconomic conditions, the regulatory environment with respect to ETPs and digital assets in the jurisdictions that the Company operates in, introduction of future ETPs, “black swan events” in the digital asset industry, competitors that offer competing ETP products and market acceptance of the Company’s ETP offerings. The Company’s financial outlook, including the various underlying assumptions, constitutes forward-looking information and should be read in conjunction with the cautionary statement on forward-looking information above. Many factors may cause the Company’s actual results, level of activity, performance or achievements to differ materially from those expressed or implied by such forward-looking information, including the risks and uncertainties related to: macroeconomic factors affecting the digital asset industry, including inflation, changes in interest rates, investor confidence in digital assets; volatility of the digital assets and fluctuation in market value of digital assets; exchange rate fluctuations; any pandemic such as the COVID-19 pandemic; fraud, misconduct or gross negligence by individuals within the digital asset industry; a negative regulatory environment with respect to digital assets; the Russian invasion of Ukraine and reactions thereto; the Israel-Hamas war and reactions thereto; the Company’s inability to attract purchasers of its ETPs; decrease in AUM as a result of investor selling the Company’s ETPs or a fall in the value of the underlying digital assets; The Company’s inability to launch attractive ETPs; the Company’s inability to increase ETP sales; the Company’s inability to implement our growth strategy; the Company’s reliance on a small number of custodian and market participants to operate its ETP programs; the Company’s ability to prevent and manage information security breaches or other cyber-security threats; the Company’s ability to compete against competitors; strategic relations with third parties; changes to technologies on which ETPs are purchased and sold is reliant; the Company’s ability to distribute ETPs in jurisdictions it is not currently operating in; the Company’s ability to obtain, maintain and protect our intellectual property; the Company’s liquidity and capital resources; pending and threatened litigation and regulatory compliance; changes in tax laws and their application; the Companys ability to expand our sales, marketing and support capability and capacity; and maintaining our customer service levels and reputation. The purpose of the forward-looking information is to provide the reader with a description of management’s expectations regarding our financial performance and may not be appropriate for other purposes.
THE CBOE CANADA EXCHANGE DOES NOT ACCEPT RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE
Cision
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SOURCE DeFi Technologies Inc.
DeFi
Pump.Fun is revolutionizing the Ethereum blockchain in terms of daily revenue
The memecoin launchpad saw the largest daily revenue in all of DeFi over the past 24 hours.
Memecoin launchpad Pump.Fun has recorded the highest gross revenue in all of decentralized finance (DeFi) in the last 24 hours, surpassing even Ethereum.
The platform has raised $867,429 in the past 24 hours, compared to $844,276 for Ethereum, according to DeFiLlama. Solana-based Telegram trading bot Trojan was the third-highest revenue generator of the day, as memecoin infrastructure continues to dominate in DeFi.
Pump.Fun generates $315 million in annualized revenue according to DeFiLlama, and has averaged $906,160 per day over the past week.
Income Ranking – Source: DeFiLlama
The memecoin frenzy of the past few months is behind Pump.fun’s dominance. Solana-based memecoins have been the main drug of choice for on-chain degenerates.
The app allows non-technical users to launch their own tokens in minutes. Users can spend as little as $2 to launch their token and are not required to provide liquidity up front. Pump.Fun allows new tokens to trade along a bonding curve until they reach a set market cap of around $75,000, after which the bonding curve will then be burned on Raydium to create a safe liquidity pool.
Pump.Fun generates revenue through accrued fees. The platform charges a 1% fee on transactions that take place on the platform. Once a token is bonded and burned on Raydium, Pump.fun is no longer able to charge the 1% fee.
Ethereum is the blockchain of the second-largest cryptocurrency, Ether, with a market cap of $395 billion. It powers hundreds of applications and thousands of digital assets, and backs over $60 billion in value in smart contracts.
Ethereum generates revenue when users pay fees, called gas and denominated in ETH, to execute transactions and smart contracts.
DeFi
DeFi technologies will improve trading desk with zero-knowledge proofs
DeFi Technologies, a Canadian company financial technology companyis set to enhance its trading infrastructure through a new partnership with Zero Computing, according to a July 30 statement shared with CryptoSlate.
The collaboration aims to integrate zero-knowledge proof tools to boost operations on the Solana And Ethereum blockchains by optimizing its ability to identify and execute arbitrage opportunities.
Additionally, it will improve the performance of its DeFi Alpha trading desk by enhancing its use of ZK-enabled maximum extractable value (MEV Strategies).
Zero knowledge Proof of concept (ZKP) technology provides an additional layer of encryption to ensure transaction confidentiality and has recently been widely adopted in cryptographic applications.
Optimization of trading strategies
DeFi Technologies plans to use these tools to refine DeFi Alpha’s ability to spot low-risk arbitrage opportunities. The trading desk has already generated nearly $100 million in revenue this year, and this new partnership is expected to further enhance its algorithmic strategies and market analysis capabilities.
Zero Computing technology will integrate ZKP’s advanced features into DeFi Alpha’s infrastructure. This upgrade will streamline trading processes, improve transaction privacy, and increase operational efficiency.
According to DeFi Technologies, these improvements will increase the security and sophistication of DeFi Alpha’s trading strategies.
The collaboration will also advance commercial approaches for ZK-enabled MEVs, a new concept in Motor vehicles which focuses on maximizing value through transaction fees and arbitrage opportunities within block production.
Additionally, DeFi Technologies plans to leverage Zero Computing technology to develop new financial products, such as zero-knowledge index exchange-traded products (ETPs).
Olivier Roussy Newton, CEO of DeFi Technologies, said:
“By integrating their cutting-edge zero-knowledge technology, we not only improve the efficiency and privacy of our transactions, but we also pave the way for innovative trading strategies.”
Extending Verifiable Computing to Solana
According to the release, Zero Computing has created a versatile, chain-agnostic platform for generating zero-knowledge proofs. The platform currently supports Ethereum and Solana, and the company plans to expand compatibility with other blockchains in the future.
The company added that it is at the forefront of introducing verifiable computation to the Solana blockchain, enabling complex computations to be executed off-chain with on-chain verification. This development represents a significant step in the expansion of ZKPs across various blockchain ecosystems.
Mentioned in this article
Latest Alpha Market Report
DeFi
Elastos’ BeL2 Secures Starknet Grant to Advance Native Bitcoin Lending and DeFi Solutions
Singapore, Asia, July 29, 2024, Chainwire
- Elastos BeL2 to Partner with StarkWare to Integrate Starknet’s ZKPs and Cairo Programming Language with BeL2 for Native DeFi Applications
- Starknet integration allows BeL2 to provide smart contracts and dapps without moving Bitcoin assets off the mainnet
- Starknet Exchange Validates the Strength of BeL2’s Innovation and Leadership in the Native Bitcoin Ecosystem
Elastos BeL2 (Bitcoin Elastos Layer2) has secured a $25,000 grant from Starknet, a technology leader in the field of zero-knowledge proofs (ZKPs). This significant approval highlights the Elastos BeL2 infrastructure and its critical role in advancing Bitcoin-native DeFi, particularly Bitcoin-native lending. By integrating Starknet’s ZKPs and the Cairo programming language, Elastos’ BeL2 will enhance its ability to deliver smart contracts and decentralized applications (dapps) without moving Bitcoin (BTC) assets off the mainnet. This strategic partnership with Starknet demonstrates the growing acceptance and maturity of the BeL2 infrastructure, reinforcing Elastos’ commitment to market leadership in the evolving Bitcoin DeFi market.
Starknet, developed by StarkWare, is known for its advancements in ZKP technology, which improves the privacy and security of blockchain transactions. ZKPs allow one party to prove to another that a statement is true without revealing any information beyond the validity of the statement itself. This technology is fundamental to the evolution of blockchain networks, which will improve BeL2’s ability to integrate complex smart contracts while preserving the integrity and security of Bitcoin.
“We are thrilled to receive this grant from Starknet and announce our partnership to build tighter integrations with its ZKP technology and the Cairo programming language,” said Sasha Mitchell, Head of Bitcoin Layer 2 at Elastos. “This is a major milestone for BeL2 and a true recognition of the maturity and capabilities of our core technology. This support will allow us to further develop our innovation in native Bitcoin lending as we look to capitalize on the growing acceptance of Bitcoin as a viable alternative financial system.”
A closer integration with Cairo will allow BeL2 to leverage this powerful programming language to enhance Bitcoin’s capabilities and deliver secure, efficient, and scalable decentralized finance (DeFi) applications. Specifically, the relationship with Cairo reinforces BeL2’s core technical innovations, including:
- ZKPs ensure secure and private verification of transactions
- Decentralized Arbitrage Using Collateralized Nodes to Supervise and Enforce Fairness in Native Bitcoin DeFi
- BTC Oracle (NYSE:) facilitates cross-chain interactions where information, not assets, is exchanged while Bitcoin remains on the main infrastructure
BeL2’s vision goes beyond technical innovation and aims to innovate by creating a new financial system. The goal is to build a Bitcoin-backed Bretton Woods system, address global debt crises, and strengthen Bitcoin’s role as a global hard currency. This new system will be anchored in the integrity and security of Bitcoin, providing a stable foundation for decentralized financial applications.
As integration with Starknet and the Cairo programming language continues, BeL2 will deliver further advancements in smart contract capabilities, decentralized arbitration, and innovative financial products. At Token 2049, BeL2 will showcase further innovations in its core technologies, including arbitrators, that will underscore Elastos’ vision for a fairer decentralized financial system rooted in Bitcoin.
About Elastos
Elastos is a public blockchain project that integrates blockchain technology with a suite of redesigned platform components to produce a modern Internet infrastructure that provides intrinsic privacy and ownership protection for digital assets. The mission is to create open source services that are accessible to the world, so developers can create an Internet where individuals own and control their data.
The Elastos SmartWeb platform enables organizations to recalibrate how the Internet operates to better control their own data.
https://www.linkedin.com/company/elastosinfo/
ContactPublic Relations ManagerRoger DarashahElastosroger.darashah@elastoselavation.org
DeFi
Compound Agrees to Distribute 30% of Reserves to COMP Shareholders to End Alleged Attack on Its Governance
Compound will introduce the staking program in exchange for Humpy, a notorious whale accused of launching a governance attack on the protocol, negating a recently adopted governance proposal.
Compound is launching a new staking program for COMP holders as a compromise with Humpy, a notorious DeFi whale accused of launching a governance attack against the veteran DeFi protocol.
On July 29, Bryan Colligan, head of business development at Compound, published a governance proposal outlining plans for a new compound participation product that would pay 30% of the project’s current and future reserves to COMP participants.
Colligan noted that the program was requested by Humpy in exchange for his agreement Proposition 289 — which sought to invest 499,000 COMP worth approximately $24 million into a DeFi vault controlled by Humpy, and which appears to have been forced by Humpy and his associates over the weekend.
“We propose the following staking product that meets Humpy’s stated interests as a recent new delegate and holder of COMP in exchange for the repeal of Proposition 289 due to the governance risks it poses to the protocol,” Colligan said. “The Compound Growth Program…will execute the above commitments, given the immediate repeal of Proposition 289.”
Colligan added that the proposal would expire at 11:59 p.m. EST on July 29. Had Humpy not rescinded Proposition 289, Compound would move forward with it. Proposition 290 — block Humpy using the Compound team’s multi-sig to deploy a new governor contract removing the delegate’s governance power behind Proposition 289.
Hunchback tweeted that Proposition 289 had been repealed a few hours ago. “Glad to have brought Compound Finance back into the spotlight,” they said. added. “StakedComp… finally becomes a yield-generating asset!
Markets reacted favorably to the resolution, with the price of COMP increasing by 6.2% over the past 24 hours, according to CoinGecko.
Attack on governance
Proposition 289 proposed investing 499,000 COMP from the Compound treasury into goldCOMP, a yield-generating vault of the Humpy-linked Golden Boys team.
The proposal passed with nearly 52 percent of the vote on July 28, despite two previous iterations of the proposal being defeated by strong opposition. Can And JulyThe proposals notably asked for only 92,000 COMP, with security researchers warning that any deposit of tokens into the goldCOMP vault would cede their governance power.
In May, Michael Lewellen of Web3 security firm OpenZeppelin, note The first proposal was submitted by a new governance delegate who was suddenly awarded 228,000 COMP by five wallets that got their tokens from the Bybit exchange. Combined with his own tokens, the delegate got 325,333 COMP, which is over 81% of the 400,000 tokens required for a governance proposal to reach quorum.
“We have been alerting the community to the risk that these delegates could support a potential attack on governance,” Lewellen said. “The timing of the new proposal and these recent delegations are suspect.”
Read more: Compound community accuses famous whale of attacking engineering governance
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