COMP Down 6.7% after Supposed ‘Governance Attack’ on Compound DAO

COMP, the native token of the lending protocol Compound, is experiencing a 6.7% decrease in value following what is being referred to as a “governance attack” on the Compound DAO. A group known as the ‘Golden Boys’ successfully pushed through a proposal to direct $24 million worth of COMP tokens to a yield-bearing protocol called goldCOMP, benefiting COMP token holders with passive income. However, Wintermute and other major stakeholders have raised concerns that this move constitutes an attack on the protocol’s governance. A governance attack occurs when an attacker gains significant voting power in a DAO to manipulate the protocol for personal gain, taking advantage of the tradable nature of governance tokens. The attack on Compound involved coordinated efforts, led by a whale named Humpy, who sought to allocate COMP tokens to the goldCOMP protocol. The Golden Boys made multiple attempts, with their latest proposal finally passing. Despite allegations of attempted fund theft, Humpy claims that the now-passed GoldCOMP fund has safeguards in place to prevent such actions. In response to the Golden Boys’ success, the community has put forward a motion to impose limitations on their actions, aiming to give the community more time to react to governance decisions. However, it remains uncertain whether this will deter the Golden Boys from accessing the COMP tokens they sought.