- A small group lead by whale Humpy gathered enough tokens on the open market to help barely pass their plan against the protests of many community members. This recent proposal, passed by Compound Finance’s DAO, has triggered charges of a governance attack.
- A yield-bearing protocol under the authority of “the Golden Boys,” a group headed by Humpy that pushed the proposal through and is believed to have engaged in similar DAO-hijacking activities in the past, will get 499,000 COMP tokens, which are now valued at almost $24 million, according to the plan.
We are excited to assist in realizing Bitcoin’s full potential and to keep bridging the divide between conventional finance and digital assets, said Lutnick in the release.
Community members have accused a small group of orchestrating a governance attack in response to a recent proposal approved by the lending protocol Compound Finance. They say that the group was able to sway the proposal’s approval through coercion after amassing a sizable token holding on the open market.
By a slim margin of 682,191 to 633,636 on Sunday, Proposal 289—which allots 5% of Compound’s treasury, or 499,000 COMP tokens valued at roughly $24 million—to a yield-bearing protocol created by the “Golden Boys” for a year. Voting on the idea started at 11:40 p.m. on Thursday and continued all weekend.
Nevertheless, community members have claimed that those vote totals conceal more than meets the eye. According to his X account, Michael Lewellen, an OpenZeppelin security solutions architect and security advisor for Compound Finance, connected the dots between multiple accounts accumulating COMP tokens on the open market and multiple proposals aimed at redirecting COMP holdings to the goldCOMP product developed by a group known as the Golden Boys.
Many community members expressed similar worries in reaction to Lewellen’s security notice, including Wintermute Governance, Columbia Blockchain, Penn Blockchain, and StableLab. This was especially true given that the group made two more attempts to pass its first proposal, which was unsuccessful.
After Proposal 289 was created, Lewellen stated, “I think @Humpy and the Golden Boys’ actions can be classified as a governance attack if they continue to try to withdraw money from the protocol against the wishes of all other Compound DAO delegates.” Lewellen could not be reached for comment on this story right away.
But once idea 289 was passed, Humpy—the Golden Boys’ purported leader—defended the idea in a response to Lewellen’s post. The term “steal funds” is inaccurate and deceptive, especially when it comes from the risk specialist at Compound. According to Humpy, the requested investment goes through a trust setup with a constraint set of behaviors that prohibits money theft or diversification.
In an earlier post, Wintermute’s governance account had contested the assertion that the ‘Trust Setup’ had actually stopped the funds from being diverted. It stated, Any form of withdrawal action (divest) is solely controlled by GoldenBoyzMultisig, meaning that the DAO cannot actually recall funds at any time under their own discretion. After voting in favor of starting a Phase update, the DAO would rely on GoldenBoyzMultisig to call the necessary divest functions.
In addition to the concerns, Bryan Colligan, the official growth team founder and CEO of Compound, observed that the prospect didn’t appear to be very profitable for Compound Finance. Putting security concerns aside, our preliminary study indicates that there are significantly better POL chances available, utilizing alliances with new chains and dexes. Colligan stated on X that the majority of these prospects we are analyzing have an APR of 15-20%, with others having an APR as high as 40%.
At least one of the five members of the Golden Boys multisig says they were totally uninformed of the idea, even though Humpy doesn’t seem to be operating alone. A user named Ogle (X) posted on multisig that he was unaware of the vote taking place and chose not to participate. Humpy had nominated Ogle and four other members as governors of the multisig.
A past filled with hijackings?
It is believed that Humpy has engaged in similar endeavors to use DAO governance procedures for excessive personal benefit. The Balancer DeFi protocol, which is based on Ethereum, engaged in a protracted battle with Humpy in 2022 over proposals that the whale was able to approve by accumulating a sizable vote share.
According to a Messari report, Balancer has struggled to employ incentives to match Humpy’s actions with DAO objectives over the period of [April–December 2022], instead forcing it to play a game of cat and mouse to regulate the whale’s profit-seeking behavior through governance.
Even if Humpy’s party and the protocol finally came to an agreement on a peace treaty, Humpy had to fight for months using many wallets to gain control over more than 50% of the vote share and practically approve proposals on his own.
In March of this year, Humpy was also accused of assaulting SushiSwap by its “Head Chef,” Jared Grey. As things have developed, it’s become evident that Humpy intends to use Sushi, should his governance attack succeed, to farm inflation and extract the value of the Sushi in order to justify the poor distribution and performance of his GOLD token, Grey stated in a thread detailing the purported attack on X.
In an X post on Sunday, Grey also addressed a line in Proposal 289, saying, “Feel bad for Compound and the governance attack perpetuated by Humpy.”
Disclaimer : This article was created for informational purposes only and should not be taken as investment advice. An asset’s past performance does not predict its future returns. Before making an investment, please conduct your own research, as digital assets like cryptocurrencies are highly risky and volatile financial instruments.
