Compound Finance Reaches Settlement With Crypto Whale Humpy, Defusing Governance Attack

Compound Finance has reached a settlement with crypto whale Humpy and his Golden Boys group, defusing a contentious “governance attack” that threatened to give the group control of nearly $25 million worth of COMP tokens.

Crypto whale Humpy and his Golden Boys group have withdrawn their contentious proposal to allocate nearly $25 million worth of COMP tokens to a yield-bearing protocol controlled by the group. The proposal had passed by a narrow margin on July 27, shocking many in the Compound community.

However, on July 30, Humpy announced the cancellation of Proposal 289, revealing that the ordeal ultimately benefited Compound by bringing attention to the project and paving the way for COMP to become a “yield-bearing asset.”

The settlement will see the creation of a new staking product for COMP token holders. According to Bryan Colligan, Compound’s Head of Growth, the plan is to allocate 30% of existing and new market reserves annually to staked COMP holders based on their stake size.

“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,” Colligan explained in a governance forum post.

The new staking product will be governed by the Compound DAO and also undergo security audits. Notably, risk manager Gauntlet also expressed support, stating they are “ready to conduct any requested analyses of proposed mechanisms or designs and help ensure a healthy reserve ratio is maintained.”

News of the settlement saw COMP's value surge about 7% to $51, bucking the broader crypto market downturn. According to an analysis of the supposed “governance attack” from Wu Blockchain, Compound Finance remains one of DeFi's largest lending protocols, with over $3 billion in total value locked.

This isn't the first time Humpy has stirred controversy in DeFi governance. In 2022, he reached a similar “peace treaty” with decentralized exchange Balancer after attempting to gain control of that protocol.