Compound Finance Withdraws Proposal After Pushback
In A Nutshell
A notable shift has occurred within the Compound Finance ecosystem, where a contentious proposal, known as Proposal 289, has been officially rescinded in favor of a new, more agreeable solution. This decision came after a significant pushback from the community and negotiations that led to an alternative proposal aiming to benefit COMP holders without compromising the governance of the Compound decentralized autonomous organization (DAO).
Background of Proposal 289
Proposal 289 was introduced by a group within the Compound governance system, dubbed the “Golden Boys.” This proposal aimed to create a new token, “goldCOMP,” and a treasury with 499,000 COMP tokens, valued at roughly $25 million at the time. The intent was to generate passive income for COMP holders, with the Golden Boys having the discretion over the investment of these funds. However, this initiative faced considerable opposition, being criticized as a “governance attack” due to its potential to disrupt the established governance model of Compound.
The Turnaround
In a surprising turn of events, a member of the Golden Boys, identified as “Humpy,” agreed to withdraw Proposal 289. This decision followed a constructive dialogue that led to a new proposal, initiated by Bryan Colligan, CEO of Compound’s growth team at AlphaGrowth. Announced on July 30, this proposal suggests the creation of a staking product aligning with both the interests of the Golden Boys and the broader Compound community, ensuring the DAO’s governance remains unaffected.
Features of the New Proposal
The newly proposed staking product suggests allocating 30% of both existing and future market reserves to COMP stakers, based on their staking amount. This initiative received positive feedback, including a comment from “Humpy” endorsing the proposal. Additionally, significant Compound stakeholders like Gauntlet and WintermuteGovernance have expressed support for exploring this staking product. Consensys also commented, appreciating the collaborative effort towards resolving the issue.
Market Reaction
Following the announcement of the new proposal, COMP’s market value saw an uplift, with a 6% increase over the past 12 hours, pushing its price to $51.55. Despite this positive movement, it’s crucial to note that COMP, like many DeFi tokens, has experienced a significant downturn from its all-time high in May 2021, remaining 94% below its peak.
Our Take
The resolution of Proposal 289’s controversy within the Compound community underscores the importance of collaborative governance and the capacity of DAOs to adapt and overcome governance challenges. This episode highlights the delicate balance between innovation and the safeguarding of decentralized governance models. The positive market response to the new proposal serves as a reminder of the value investors place on stability and consensus within DeFi projects. As Compound and its stakeholders move forward, this incident may well serve as a valuable case study in the evolution of decentralization and community governance.
Sources
– Compound (comp.xyz)
– CoinGecko
