Compound Finance Governance Attack Approved With $24 Million Allocated to goldCOMP

Key Points:

• Compound Finance’s Proposal 289 was approved with 499,000 COMP tokens to a yield-bearing protocol created by the “Golden Boys.”
• The proposal has led to accusations of a Compound Finance governance attack.
• In response to the controversy, Proposal 290 has been introduced to transfer the Compound Governance Timelock Admin to “CommunityMultiSig.”

On July 28, Compound Finance’s Proposal 289 narrowly passed, allocating 5% of the protocol’s treasury—499,000 COMP tokens, valued at about $24 million—to a yield-bearing protocol designed by the “Golden Boys.”

Read more: Celer Network Attack Is Causing DeFi Chaos Along With Compound Crash

Compound Finance Governance Attack Causes Controversy

The contentious vote has sparked accusations of a Compound Finance governance attack.

The passage of the proposal has been incredibly contentious within the Compound community. Some opponents have come out to say that a small group of investors—a group dubbed the “Golden Boys”—gamed the vote by accumulating a huge number of COMP tokens, thus swaying the result. In fact, it had been spelled out days before on Compound governance message boards that insiders had warned about potential manipulation.

The Compound Finance governance attack marked the final of several attempts by the Golden Boys to secure funding for their goldCOMP project. Earlier proposals, most recently on May 6, 2024, and an updated request on July 19, failed to rally sufficient support. One of the major arguments against it was that this would just give the Golden Boys even more control over funds that can be misused.

New Proposal Seeks to Reassess Governance Controls

One security advisor for Compound Finance, Michael Lewellen, pegged the Golden Boys’ actions as a possible a governance attack. However, Humpy, one of the leaders from the Golden Boys camp, came out to defend the proposal, arguing that the funds would be managed in a trust setup designed to make sure they are not used maliciously, so a Compound Finance governance attack is impossible.

Bryan Colligan, the growth team head and founder/CEO of Compound, has commented on the entire controversy, pointing to other lucrative investment opportunities outside the goldCOMP proposal. Now, there is also a proposal 290 for the transfer of Compound Governance Timelock Admin to “CommunityMultiSig,” which could make any such proposals in the future very limited.

At the moment, the implementation date for Proposal 289 is set on the 30th of July, with the $24 million to be allocated to the goldCOMP treasury fund.