Venture capital fund a16z, largest vote delegator, abstained from voting on controversial proposal.
Key Takeaways
- Compound DAO approved Proposal 289, granting 499,000 COMP tokens to a single user.
- The proposal raises concerns about potential single-entity control of Compound's governance.
Compound governance approved Proposal 289 on July 28th, which consists of giving 499,000 COMP tokens to a user named Humpy to create a yield vault. The amount was equivalent to over $25 million at the price from the day of approval. However, users from the community highlighted this proposal as an attack on Compound’s governance which might hold it hostage to this whale.
Humpy spent the past three months buying COMP tokens to get enough voting power to approve Proposal 289. Moreover, this whale executed the same strategy on Balancer’s governance in 2022, as explained by Alex Netto, CEO at Blockful.
“At first glance, it doesn’t look like an attack, since this whale invested a lot of money to have significant voting power in Compound’s DAO. However, when you understand this user’s behavior pattern, you start thinking again that this is an attack,” added Netto.
Notably, venture capital fund a16z is the largest vote delegator on Compound’s governance, as highlighted by Daniela Zschaber, product manager at Blockful. “Their votes could have prevented Proposal 289 approval, but they didn’t vote. There’s a lot to understand still,” said Zschaber.
Moreover, if COMP holders don’t step up to this case, Compound’s governance might be held hostage to Humpy. As it locks COMP tokens in the yield vault, the whale will receive returns in more COMP tokens, adding to its voting power. “In the long term, it looks a lot like an attack,” concluded Netto.
