Compound Protocol is contemplating a serious shift in income distribution after a current governance fiasco.
The protocol plans to introduce a compensation swap that can allocate 30% of the protocol reserves to staked COMP token holders by a brand new product referred to as stCOMP.
The proposal, led by Bryan Colligan, head of development at Compound, goals to extend the monetary utility and attractiveness of COMP tokens by offering yield-bearing alternatives.
As with all DeFi lending protocols, Compound’s income is generated from charges charged to debtors. A portion of this price earnings is often paid to liquidity suppliers to spice up protocol liquidity. Nonetheless, holders of COMP tokens at present don’t obtain a share of those revenues – as is frequent with many DeFi protocols, comparable to Uniswap.
Learn extra: Uniswap token pumps are following a proposal for a change in board compensation
Paradoxically, the discussions about returning income to token holders observe a failed governance try to do the identical.
Compound was extensively seen two days in the past as an “administrative assault” by an nameless group of deputies referred to as the Golden Boys. The de facto chief “Humpy” had acquired $4.5 million price of COMP from the ByBit alternate 88 days in the past, which was then used to vote in a proposal by a slender margin of 52%.
Proposition 289 would have approved the cost of 499,000 COMP ($24 million) to a vault managed by the Golden Boys to be used in a DeFi technique the place customers may lock their COMP right into a Balancer pool to generate returns.
The board vote was seen as an illegal assault, because it was the Golden Boys’ third try to go such a vote. There had been two beforehand failed proposals on Might 6 and July 19 that OpenZeppelin had flagged as a possible “coordinated governance assault.”
Now, it seems to be like this episode of the DAO drama can have a contented ending in any case, as DAO stakeholders discover an amicable decision.
Primarily based on the newest discussion board proposal, the DAO has entered right into a truce with the Golden Boys to return the authorised funds from Proposition 289 and nullify the earlier onchain vote.
In return, the DAO would think about a income sharing program within the type of a brand new staking product, stCOMP, which was already on the protocol’s roadmap.
“We’re contemplating a yield-bearing facet for COMP token holders and likewise how we are able to improve liquidity round COMP swimming pools for draw back safety,” Colligan instructed Blockworks. “Proper now we’re speaking to 3 or 4 completely different suppliers that we’d do a pilot challenge with,” he mentioned.
Board representatives from Wintermute, Consensys and OpenZeppelin expressed their approval of the ceasefire proposal.
Earlier than the ceasefire was reached, the DAO additionally tried to go a subsequent proposal that may introduce a two-day time slot for future fund approvals. As a part of the settlement with the Golden Boys, this proposal has additionally been dropped.
The peaceable decision of this battle has been properly acquired by the markets. COMP’s token worth has recovered to its earlier degree of $51.8, earlier than the governance debacle.