Compound suffered a "governance attack" from Golden Boy leader Hampy and passed Proposition 289 with only 20% of voters voting

Compound Finance recently faced allegations of a governance attack after passing Proposal 289. This proposal allocates 5% of Compound's treasury, amounting to 499,000 COMP tokens worth about $24 million, to a yield-bearing protocol designed by a group called the "Golden Boys" for one year.

The Proposition 289 vote passed by a narrow margin

The proposal narrowly passed with 682,191 votes in favour and 633,636 against. Voting started on Thursday and concluded over the weekend.

Michael Lewellen points out the questionable nature of Proposition 289

Michael Lewellen, a security solutions architect from OpenZeppelin and advisor for Compound Finance, highlighted suspicious activity. He connected several accounts acquiring COMP tokens on the open market to proposals diverting COMP holdings towards the Golden Boys' goldCOMP product.

Community members, including Wintermute Governance, Columbia Blockchain, Penn Blockchain, and StableLab, echoed Lewellen's concerns.

They noted that the group had made previous attempts to pass similar proposals.

Lewellen described these actions as a potential governance attack. Humpy, the apparent leader of the Golden Boys, defended the proposal, claiming the funds were secured through a Trust Setup that prevented theft.

Withdrawal Concerns

Wintermute Governance questioned the Trust Setup's efficacy, noting that withdrawal actions are controlled by GoldenBoyzMultisig, limiting the DAO's control over funds.

Alternative Investment Opportunities

Bryan Colligan from Compound's growth team suggested there are more lucrative opportunities for Compound Finance, citing early analysis showing better partnerships with emerging chains and dexes offering higher APR.

Proposition 289 deceives voters

One member of the Golden Boys multisig, Ogle, claimed to be unaware of the proposal and expressed mixed feelings about the group's actions.

Golden Boy leader Hampy’s past “hijacking” experience

Humpy has a history of controversial governance activities. In 2022, Humpy was involved in a protracted struggle with the Ethereum-based Balancer protocol, using multiple wallets to control over 50% of the vote share. This led to a peace treaty after months of conflict.

Earlier this year, Humpy faced accusations from SushiSwap's Head Chef, Jared Grey, of attempting a governance attack to benefit his GOLD token.

Impact on Compound Token

Following the passage of Proposal 289, Compound’s token was trading at price 48.55 at press time, down nearly 4.27% in the past 24 hours.