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COMP Down 6.7% after Supposed 'Governance Attack' on Compound DAO
By Sam Reynolds,
20 days ago
A group called the 'Golden Boys' has pushed through a proposal, after three prior attempts, to direct $24 million in COMP token to a yield-bearing protocol called goldCOMP which would give passive income to COMP token holders.
Wintermute and other large stakeholders are concerned that the move constitutes a governance attack on the protocol.
COMP, the native token of the lending protocol Compound, is down over 6% as the Decentralized Autonomous Organization (DAO) that runs the protocol suffers from a possible "governance attack."
A governance attack occurs when an attacker acquires significant voting power in a DAO to manipulate the protocol for personal gain, exploiting the permissionless and tradable nature of governance tokens.
According to posts on Compound's forums , the governance attack on Compound involved a series of coordinated efforts to manipulate the platform’s decision-making process through significant COMP token delegations led by a whale named Humpy, who sought to allocate $24 million worth of COMP to a yield-bearing protocol he controlled called goldCOMP run by a group known as Golden Boys.
The group attack began weeks ago, in early May, with Proposal 118 , which called for transferring 5% of COMP's treasury to a multi-sig wallet controlled by the Golden Boys, which did not pass because community members highlighted suspicious circumstances around its introduction.
The group followed up with a second proposal, Proposal 247 , which tried a similar approach. It called for investing 5% of COMP tokens into a goldCOMP vault, which would provide passive income for COMP holders. This proposal failed to reach a quorum and was canceled.
Finally, the group tried again with Proposal 289, which has passed .
While some have alleged that this is an attempt by Humpy and the Golden Boys to "steal funds", Humpy, hit back by saying that their now-passed GoldCOMP fund uses a "Trust Setup with a constraint set of actions that doesn’t permit stealing/diverting of funds."
However, in response to the Golden Boys' geen-lit proposal, the community put forward a motion to put limits on what they can do.
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