The Golden Boys, led by Humpy, launched a governance attack on the cryptographic DAO Compound. To prevent future attacks, proposal 290 seeks to introduce delays in governance actions.
In a surprising development, Compound Finance, the Decentralized Autonomous Organization (DAO) that governs the decentralized lending protocol, experienced a potential governance attack.
What Happened?
Postings on the Compound forum revealed that the Golden Boys, led by a prominent whale known as Humpy, were attempting to influence the platform’s decision making by funneling a significant amount of COMP tokens under their control.
At issue is Proposition 289, which would allocate 5% of Compound’s assets, approximately 499,000 COMP tokens valued at $24 million, for one year to a revenue-generating protocol designed by a group known as the “Golden Boys”. Voting on this proposal began at 11:40 p.m. on Thursday and continued through the weekend. By July 28, the proposal had narrowly passed with 682,191 votes in favor and 633,636 against.
Jared Grey, CEO of SushiSwap, highlighted Humpy’s actions as a cause of significant disruption and uncertainty within the Golden Boys group:
“In their defense, I wouldn’t be surprised if Humpy has infiltrated their team and made them take on new members. They may be scrambling to figure out how to deal with it. He’s very resourceful and cunning,” he pointed out via X.
The group reportedly made several attempts to approve proposals that would benefit its own protocol, goldCOMP.
Because of community objections and procedural problems, his first two proposals failed. However, his third attempt, Motion 289, was successfully passed.
This proposal was for the transfer of COMP tokens to his goldCOMP vault. Some saw this as a scheme to siphon off funds, but Humpy claimed that his setup prevented funds from being stolen.
What Executives Are Saying
Blockful CEO Alex Netto put it well by saying the following:
“At first glance, it doesn’t look like an attack because this whale has invested a lot of money to have significant voting power in the Compound DAO. However, when you understand the pattern of this user’s behavior, you start to think again that this is an attack”.
The community responded by proposing Issue 290, which seeks to delay governance measures to prevent similar attacks in the future. In addition to the attack, Compound users were alarmed by the lack of effort made by the team to address user security concerns.
In fact, Compound users asked, “Hello, are we safe?” when asked about their safety during the governance attack. Compound team members responded, “Don’t scold me again. It’s against the rules.”
Impact on the COMP Token
The governance attack on Compound had an immediate negative impact on COMP, the protocol’s native token. COMP dropped more than 6%. The drop was fleeting though, as COMP rebounded and has risen approximately 6% in the last 24 hours, posting a positive gain as measured by Coin Market Cap.
Whether it will be the end of the Golden Boys is yet to be seen. Martin Schmidt, who co-founded Q.org, said it best in an email sent to AMBCrypto when he said:
“This cannot be solved by programs. It requires at least a basic set of spending rules and a sufficiently decentralized mechanism for enforcement.”
By Audy Castaneda
