COMP Token Rises as Whale Backs Down on Supposed ‘Governance Attack’ on Compound
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A crisis that had been called a governance attack on the Compound lending protocol seems to have been averted.
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Humpy and the Golden Boys have signaled they will accept a counter-proposal to build a yield-bearing protocol similar to goldCOMP that will be controlled by the Compound DAO.
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A move to create a new yield-bearing protocol called goldCOMP by a large group of COMP holders, the native token of the Compoud lending protocol, has been called off, and the market is reacting positively.
COMP added 5.6% to $51.27 after the proposal’s backers, a whale named Humpy and a group of COMP holders known as the Golden Boys, agreed to cancel their proposal and vote for an alternative that involves creating a staking product that will be controlled by the CompoundDAO decentralized autonomous organization.
The goldCOMP proposal, which critics are calling a governance attack, involved coordinated efforts to push a resolution through the DAO to allocate $24 million in COMP tokens to create a yield-bearing protocol intended to provide passive income. It was unpopular with many large stakeholders in the Compound ecosystem, including Wintermute, owing to allegations of vote manipulation by the proposers, concerns about the centralization of control and potential risks of mismanaging the $24 million COMP treasury funds.
Now, the crisis has been averted.
Instead, Humpy and the collective have agreed to a counter-proposal that will create a staking product that distributes 30% of existing and new market reserves annually to staked COMP holders, proportional to their stake.
The new staked product will be controlled by the Compound DAO – directly addressing a concern many had that Humpy and the Golden Boys would have outsized control – and will be audited by a designated security partner appointed by Compound and continually audited by the DAO’s Market Risk Manager.
This is all contingent on Humpy formally withdrawing Proposal 289, which passed, that allocated COMP tokens into a trust to create goldCOMP. Humpy did not withdraw the offer by the initial deadline, but said in forum posts that he “fully approves” the idea.
Edited by Sheldon Reback.
