Compound Finance, a venerated entity within the decentralized lending and borrowing sphere, finds itself ensnared in a maelstrom of controversy, sparked by accusations of a governance coup.

The passage of proposal 289 has ignited fervent allegations of a governance ambush, purportedly masterminded by a coalition identified as the “Golden Boys.”

Governance Forum Discord Over COMP Proposal

The debacle originated in Compound’s governance forums, where internal forewarnings of potential governance malfeasance surfaced days prior to the proposal’s ratification.

On May 6, the Compound Governance body rebuffed proposal 247 due to an inadequate vote tally. This proposal, titled “Treasury to Invest 5% of COMP Holdings into goldCOMP Vault,” sought to instantiate a wrapped COMP token dubbed “GoldCOMP,” to be managed and funded by the Golden Boys.

Golden Boy member Humpy elucidated that this token would engender a novel “passive income” stratum for COMP holders via a Balancer pool, thus facilitating long-term investments. Nevertheless, an amended version of the proposal, number 279, similarly floundered in a July 19 ballot.

Proposal 279 aimed for a year-long investment of 92,000 COMP into the goldCOMP Treasury Fund. Despite its failure, trepidations persisted among community members, including the Wintermute Governance bloc, over fears that the proposal would bestow disproportionate control over the funds to the Golden Boys.

Wintermute Governance accentuated that any extraction maneuvers from the vault would be monopolized by the GoldenBoyzMultisig, effectively centralizing governance rights with the Golden Boys.

Michael Lewellen of the OpenZeppelin bloc, under the pseudonym “cylon,” cautioned that the Golden Boys’ maneuvers could be construed as a governance seizure should they persist in their pursuit of fund control despite resistance from other DAO delegates.

Proposals 289 and 290: The Saga Intensifies

The dispute crescendoed on July 28 when proposal 289, tabled by the Golden Boys, narrowly triumphed with 682,191 affirmative votes against 633,636 dissenting ones.

This proposal significantly escalated the COMP allocation for the goldCOMP treasury from 92,000 to a staggering 499,000. The ratification of proposal 289 signifies its enactment on July 30.

Consequently, proposal 290, titled “Precautionary Transfer of Timelock Admin,” has been introduced, advocating the transfer of the Compound Governance Timelock Admin to “CommunityMultiSig” to preempt the passage of future proposals akin to those advanced by the Golden Boys. Critics, however, contend that this safeguard may be belated.

The 499,000 COMP, valued at approximately $24.1 million at the time of documentation, is anticipated to be consigned to the goldCOMP treasury fund around July 30, as delineated by the proposal’s stipulations.

Concurrently, the Compound Finance website was reportedly compromised earlier this month, according to crypto sleuth ZachXBT, adding another layer of complexity to the ongoing governance fracas.