Compound DAO faces potential whale control after proposal approval

Compound governance authorised Proposal 289 on July twenty eighth, which consists of giving 499,000 COMP tokens to a person named Humpy to create a yield vault. The quantity was equal to over $25 million on the worth from the day of approval. Nonetheless, customers from the neighborhood highlighted this proposal as an assault on Compound’s governance which could maintain it hostage to this whale.

Humpy spent the previous three months shopping for COMP tokens to get sufficient voting energy to approve Proposal 289. Furthermore, this whale executed the identical technique on Balancer’s governance in 2022, as defined by Alex Netto, CEO at Blockful.

“At first look, it doesn’t appear like an assault, since this whale invested some huge cash to have vital voting energy in Compound’s DAO. Nonetheless, while you perceive this person’s conduct sample, you begin considering once more that that is an assault,” added Netto.

Notably, enterprise capital fund a16z is the most important vote delegator on Compound’s governance, as highlighted by Daniela Zschaber, product supervisor at Blockful. “Their votes might have prevented Proposal 289 approval, however they didn’t vote. There’s rather a lot to grasp nonetheless,” stated Zschaber.

Furthermore, if COMP holders don’t step as much as this case, Compound’s governance may be held hostage to Humpy. Because it locks COMP tokens within the yield vault, the whale will obtain returns in additional COMP tokens, including to its voting energy. “In the long run, it seems rather a lot like an assault,” concluded Netto.