“Control” fight in that altcoin: serious attack, price down!

Compound, one of the leading altcoin lending platforms, has been seriously shaken by recent developments. The platform’s native token COMP has lost more than 6% of its value following recent developments. The source of the problem is the fight for control over the Decentralized Autonomous Organization (DAO), the platform’s governance structure.

A group called Golden Boys accepted a negative proposal for the altcoin

The events were triggered by a group calling themselves “Golden Boys.” After three failed attempts, this group successfully made its fourth attempt and accepted a proposal to direct $24 million in COMP tokens to a protocol called goldCOMP, which is said to provide passive income to COMP holders.

This development has caused serious concern among major investors of the platform, such as Wintermute. It is claimed that this situation is considered a “governance attack” on the protocol. The term “governance attack”, often used in the altcoin world, refers to an attacker who manipulates the DAOthe decision-making mechanism to their advantage, using permissionless and tradable governance tokens.

What happened?

According to posts on the Compound forums, the attack began as a coordinated effort led by a whale nicknamed “Humpy.” Humpy took control of a large amount of COMP token with the goal of transferring $24 million in COMP tokens to the goldCOMP protocol, which he controls. The group, known as the Golden Boys, prepared three different proposals to implement Humpy’s plan. The first proposal, Proposal 118, called for transferring 5% of COMP’s treasury to a multi-signature wallet controlled by the Golden Boys, but was rejected due to suspicious circumstances.

The second proposal, Proposition 247, aimed to deposit 5% of COMP token in the goldCOMP vault, but was canceled due to insufficient support. The third and final Proposition 289, however, had the same goal but took a different approach. The moves by Humpy and Golden Boys were accused of being aimed at “stealing funds”, Humpy denied the accusations. He argued that the GoldCOMP fund that became valid was based on “a trust structure that includes a number of restrictions to prevent the theft or diversion of funds”. However, the community took action in response to the success of Golden Boys.

Will Golden Boys succeed in seizing COMP tokens?

Proposition 290, which will be put to a vote in about a day, aims to change the powers of the Timelock Admin, the smart contract that queues governance actions. This will allow governance decisions to take effect with a two-day delay, giving the community more time to react. This move could prevent future governance attacks, but it is not yet clear whether it will block the COMP token that Golden Boys are looking for. With the development, the COMP price dropped by 6 percent.

These incidents have raised serious questions about the safety and effectiveness of governance mechanisms in the cryptocurrency ecosystem. The democratic structure of DAOs can be vulnerable to manipulation by malicious actors. Therefore, it is necessary to develop more robust security measures to prevent such attacks and protect the rights of communities. On the other hand, such internal conflicts in major protocols like Compound can damage investor confidence.

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