Compound Finance has settled with crypto whale Humpy and his Golden Boys group over the contentious allocation of 499,000 COMP tokens worth approximately $24 million to a yield-bearing protocol.
On July 30, Humpy announced that Proposal 289, which had sparked the controversy, was “now canceled,” pointing out that his actions brought the project to the limelight and that its native COMP token will now be turned into a “yield-bearing asset.”
Following the news, COMP value bucked the broader market downturn to increase by around 7% to $51 as of press time, according to CryptoSlate’s data.
Compound Finance is one of the largest DeFi lending protocols in the industry, with over $3 billion worth of assets locked.
Compound’s new staking product
Bryan Colligan, a representative from Compound Finance, disclosed that the platform’s settlement with Humpy centers on creating a new staking product. This product will allocate 30% of existing and new market reserves annually to staked COMP holders based on their stake size.
Colligan wrote:
“These Staking Rewards will be distributed with the same cadence as the COMP token rewards that currently boost markets on Compound per Gauntlet’s incentive recommendations.”
The Compound decentralized autonomous organization (DAO) will govern the new staking product. It will be audited by a designated security partner appointed by the Compound and continuously scrutinized by the DAO’s Market Risk Manager.
The community, including Humpy and DeFi risk manager Gauntlet, has generally welcomed the news. Humpy expressed full approval of the move, while Gauntlet remarked:
“Thank you for this proposal. Gauntlet supports exploring a Compound staking product. As a service provider to the DAO, we are ready to conduct any requested analyses of proposed mechanisms or designs and help ensure a healthy reserve ratio is maintained.”
Meanwhile, Doo from StableLab pointed out that Compound has to take its governance security more seriously to forestall a recurrence of similar events in the future. It added:
“We believe it’s crucial to consider Compound Governance security in the long term. Our concerns include certain parties cementing Voting Power by giving extra incentive to stakers to them. There should be several governance changes to increase governance security.”
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