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 Had Humpy not rescinded Proposition 289, Compound would move forward with it.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Hunchback tweeted that Proposition 289 had been repealed a few hours ago.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