• Compound Finance is having a governance crisis under claims of a governance attack by the Golden Boys bloc.

• The Wintermute Governance group and other community members are aggressively fighting the perceived centralization measures.

• The result of Proposal 290 and the more general governance debates will determine the direction of the organization and its dedication to decentralisation.

Community risk assessors warned against the perceived centralization effort days before the proposal’s passage. According to community forums and several recent proposals, Compound Finance, a decentralized lending and borrowing protocol, is going through a tumultuous community disagreement over governance.

The passage of Proposal 289 on July 28 appears to have catalyzed a series of social media allegations that a governance attack has occurred, perpetuated by a voting bloc called the “Golden Boys.”

On the Compound governance message boards, insiders warned that such an event would happen just days before as discussions over the proposals played out.

Compound Finance Proposals Elicit’ Governance Attack’ Allegations

On May 6, Compound Governance shot down proposal 247 when it failed to reach a quorum. The proposal, dubbed “Treasury to Invest 5% of COMP holdings into goldCOMP Vault,” was subsequently canceled.

According to one of its purported supporters, the proposal’s intent was to establish a wrapped COMP token called “GoldCOMP” that would be held in a separate treasury operated by the Golden Boys and funded by COMP.

This claimed Golden Boy “Humpy” to provide an additional layer of “passive income” for COMP holders, which would be invested and divested at the discretion of the Golden Boys.

Per a post from Golden Boy member Humpy:

“When a user places COMP into the goldCOMP vault, the depositor receives goldCOMP, a semi-liquid wrapped token representing their initial deposit. These goldCOMP tokens can be placed in a 99/1 Balancer pool, creating a passive income stream for COMP holders who plan to hold COMP for a long period.”

An updated proposal from the bloc, number 279, failed to pass a July 19 vote. It purportedly requested “a one-year investment of 92,000 COMP” be sent to the goldCOMP Treasury Fund.”

On Compound Governance message boards, around 279’s failure, “Wintermute Governance,” representing the Wintermute bloc, expressed concerns that the Golden Boys proposal would give the group complete control over the transferred funds.

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“GoldenBoyzMultisig solely controls any form of withdrawal action (divest),” wrote Wintermute, adding that the separate vault “delegates the deposited COMP’s governance rights to the GoldenBoyzMultisig.” Michael Lewellen, of the OpenZeppelin bloc, under the username “Cylon,” went so far as to state that the Golden Boys proposal could be perceived as a governance attack:

“In my personal opinion, the actions of Humpy and the Golden Boys can be considered an attack if they persist in their attempts to take funds from the protocol in clear opposition to the will of all other Compound DAO delegates.“

Decentralization Dilemma

On July 28, a subsequent proposal, number 289, from the Golden Boys passed by a measure of 682,191 to 633,636 against. The new proposal increased the COMP requested to fund the goldCOMP treasury from 92,000 to 499,000.

As of this article’s publication, 289’s passage indicates an implementation date of July 30. It’s been followed by proposal 290, “Precautionary Transfer of Timelock Admin,” which proposes sending the Compound Governance Timelock Admin to “CommunityMultiSig.”

Transferring the Timelock Admin could hamper future efforts to pass proposals similar to the Golden Boys. However, it may be too late when it comes to proposal 289. The 499,000 COMP requested — worth approximately $24.1 million as of this article’s publication — will likely still move to the goldCOMP treasury fund on or around July 30 per the terms of proposal 289’s passage.

The Golden Boys Phenomenon

Compound Finance, which operates as a decentralized lending protocol, has seen a rise in the influence of the Golden Boys. This phenomenon underscores the critical issue of centralization within decentralized platforms.

The Golden Boys have attempted to marshal significant COMP resources through their recent proposals, sparking concerns about these attacks and the potential monopolization of COMP token holdings.

The Wintermute Governance bloc has been particularly vocal about these concerns, emphasizing the risks posed by centralizing control over substantial COMP assets within a single voting bloc. The apprehensions were amplified during the discussions around Proposal 279 and continued through the passage of Proposal 289.

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Its community forums have become a battleground for these governance disputes, with the Wintermute Governance bloc and other community members striving to maintain the decentralized ethos of the platform.

The ongoing debate highlights the delicate balance between governance efficiency and the risk of centralization, a common challenge decentralized autonomous organizations (DAOs) face.

In conclusion, Compound Finance navigates a critical juncture in its evolution of governance. The actions and proposals by the Golden Boys have brought to the forefront the challenges of maintaining decentralization in the face of potential governance attacks.

The community’s response, particularly from blocs like Wintermute Governance, will be crucial in shaping the future governance landscape.