Compound Grants $24M COMP to “Golden Boys” to Design Protocol; Proposal Sparks Governance Attack Allegations

A recent proposal passed by Compound Finance has sparked allegations of a governance attack from the community, who claim that a small group was able to force the proposal through the approval process after acquiring a large number of tokens on the open market. Last Sunday, Proposal 289 was passed by a narrow margin of 682,191 votes to 633,636 votes, allocating 5% of the Compound treasury's funds (499,000 COMP tokens, worth about $24 million) to a one-year interest-bearing protocol designed by the "Golden Boys". Voting on the proposal began at 11:40 p.m. local time on Thursday and lasted through the weekend. However, community members claim that there is a hidden story behind these voting totals. Michael Lewellen, security solutions architect at OpenZeppelin and a security consultant for Compound Finance, posted on X that some accounts accumulating COMP tokens on the open market are associated with several proposals aimed at transferring COMP assets to the goldCOMP product created by the "Golden Boys". In response to Lewellen’s security alert, several community members, including Wintermute Governance, Columbia Blockchain, Penn Blockchain, and StableLab, expressed similar concerns, especially when the group tried twice more to pass its initially failed proposal. “In my personal opinion, the actions of @Humpy and the Golden Boys could be considered a governance attack if they persist in trying to extract funds from the protocol, clearly against the will of all other Compound DAO delegates,” Lewellen wrote after Proposition 289 was created. However, after Proposition 289 passed, the apparent leader of the Golden Boys (known as Humpy) defended the proposal, saying, “‘Stealing funds’ is a false and misleading statement, especially coming from Compound’s risk experts. The requested investment went through the Trust Setup, which has a series of restrictions that do not allow the theft/transfer of funds.” (The Block)