Compound suffered a governance attack, who was behind it?

Original author: @StableScarab, @t__norm

Original compilation: Peisen, BlockBeats

Editor’s note:

On July 29, the recently passed proposal of the DeFi lending protocol Compound triggered Got it Allegations of governance attacks by community members. Proposal 289 allocates 5% of Compound’s funds (499,000 COMP tokens worth approximately $24 million) to a yield protocol designed by the “Golden Boys” for one year.

The proposal narrowly passed with 682,191 votes to 633,636, but community members claimed that a small group of people were able to muscle their way through the approval process after purchasing large amounts of tokens on the open market. Compound Finance security consultant Michael Lewellen said several accounts hoarding COMP tokens on the open market are linked to several proposals to allocate COMP to a goldCOMP product created by a group called the Golden Boys.

@t__norm pointed out that this is not the first time the Golden Boys have committed a crime. As early as 2022, they used similar techniques to attack Balancer, and triggered an "arms war" between Balancer stakeholders, Humpy and community stakeholder Aura. competition". ,

Compound Treasury just pulled out $25 million in what is being called a governance attack .

Who is behind this?

The most important whale in DeFi you’ve probably never heard of – Humpy (@Titanium_32). His story spans years, multiple DeFi protocols, and millions of dollars.

Humpy is not your typical whale. He is a major player in multiple protocols, cleverly leveraging incentive design to earn large amounts of governance tokens. His tactics have allowed him to amass wealth and controversial control, most notably of Balancer in 2022.

The Balancer Crisis Two Years Ago

Over the course of eight months in 2022, Balancer quietly lived through one of the most controversial (and illuminating) governance sagas of the year.

veBAL was launched to align token holders with DAO goals and protocol revenue. But what happens when an incentive system has unintended consequences?

Balancer has been working hard to align its systems with the activity of a specific veBAL whale named Humpy. When incentives fail, Balancer is embroiled in a cat-and-mouse game of controlling whales’ profit-seeking behavior through governance.

Humpy’s strategy is simple: dominate the pool’s liquidity, actively vote on the meter, and collect BAL emissions. The only problem is, the meter he uses generates very little revenue for Balancer.

Humpy’s strategy has been tweaked by Balancer to prevent them from farming low-income pools. Humpy discovers new vulnerabilities every time it updates the incentive metrics framework.

Unfortunately, Humpy accidentally trapped their capital in the illiquid tetuBAL pool, forcing them to double down on their position and protect their meter strategy at all costs.

The events taking place can only be described as an arms race as Balancer stakeholders, Humpy and community stakeholders such as Aura etc. fight to gain sufficient governance power to defend their interests.

Tensions boiled over as Humpy's governance activity escalated, with the DAO struggling to compete with his voting power, leading to multiple proposal re-votes and a controversial strategy to reduce the amount of total governance unlocked by Aura The friction of power.

Thankfully, the DAO was able to reach an agreement with the whales on the peace treaty proposal that ends voting today.

If you’re interested in DAO governance and incentive design, or want to hear a compelling story about power and money, check out the latest Governor Note, which delves into the saga, its impact, and consequences.

Where is the way out for decentralized governance?

In the latest governance attack, Humpy used his voting power to deposit $25 million directly from the Compound vault into his own gold COMP vault. This allows users to earn revenue on their COMP while increasing Humpy’s reach. While legal, it raises questions about decentralized governance.

Humpy의 영향력은 거버넌스를 넘어 확장됩니다. 그는 "Golden Boys" 커뮤니티를 위한 자신만의 토큰을 가지고 있습니다. 오늘의 컴파운드 이벤트 이후, 투기꾼들이 "고수익" 거버넌스 또는 농업 전략을 계속 찾을 수 있는 험피의 능력에 베팅함에 따라 그 가치는 두 배로 증가했습니다.

이 사건은 DAO 및 DeFi 프로토콜의 핵심 질문을 강조합니다. 단일 고래가 자신에게 유리한 주요 결정에 영향을 미칠 수 있다면 얼마나 분산되어 있습니까? 험피의 행동은 분산형 거버넌스와 인센티브 설계의 권력 역학에 대한 사례 연구입니다.

어떻게 생각하세요? 이것이 거버넌스 공격입니까, 아니면 게임 규칙 내에 있습니까? 한 가지 확실한 것은 이번이 마지막이 아닐 것이라는 점이다.

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