Compound DAO: Oversight Demands Grow Amid Conflict Allegations
Decentralized finance (DeFi) lending platform Compound is feeling the pressure to bring in more risk managers. This comes after a recent governance proposal, put forward by current risk manager Gauntlet, was approved. The proposal itself relates to Compound’s collaboration with Morpho on Polygon.
Now, Chainrisk is stepping up as a possible contender for a risk manager role. They are urging COMP delegates to be more open about their discussions and dealings. In fact, a response even highlights a mysterious, unlabeled crypto address that some suspect might be connected to Gauntlet.
DeFi commentator Togbe isn’t holding back, describing Gauntlet’s proposal as “some of the griftiest stuff I’ve ever seen from Gauntlet.” The core of the issue? Gauntlet is proposing Compound use Morpho – a competitor (and a company Gauntlet *also* works with) – to launch new markets on Polygon.
Read more: Aave could leave Polygon over plan to use bridge funds for yield farming
Gauntlet, on the other hand, paints this as a win-win-win situation for Compound, Morpho, and Polygon. They see it as an opportunity to jump on a potential opening in the market, especially since things have become a bit frosty between Polygon and Aave, DeFi’s biggest lending platform.
Aave is a big deal for Polygon – it accounts for over a third of Polygon’s total value locked (TVL), according to DeFiLlama. And recently, Aave even threatened to ditch Polygon because of a contentious plan to use bridge funds for yield farming – guess who was involved? Morpho, again.
Aave governance delegate Marc Zeller didn’t hold back either, taking to X to point out the obvious conflict of interest. He slammed the proposal as basically “subsidizing a competitor’s growth that’s been eating into their market share every quarter.”
To show how strongly he felt, he even offered to bet $50,000 that this whole move would *not* be a win for COMP holders.
Read more: Maker DAO drama flares amid proposal to tackle ‘governance attack’
But Gauntlet is fighting back, defending their proposal. They’re pointing to things like “ongoing lawsuits, Labs hands tied, market share eroding” as reasons why this move makes sense. They also insist it’s not just about them, highlighting the fee structure and the fact that their Morpho earnings are already capped.
Gauntlet’s proposal does say that “Compound DAO will be the sole owner of the vaults and will get all the revenue” during this “joint incentives trial program.” However, it also mentions that down the line, if the DAO agrees, Gauntlet “may introduce a fee-splitter contract” to get a cut for their work as the “vaults’ Curator.”
Gauntlet’s Vice President of Growth, Nick Cannon, also jumped into the fray on X, dismissing the criticism as “approved comms” from a “worried” Aave side. He even claimed that Gauntlet was censored when they worked with Aave.
Adding fuel to the fire, Polygon Labs’ CEO alleged that Aave has been pressuring teams during governance votes.
This isn’t the first rodeo for these three – Gauntlet, Aave, and Morpho have clashed before. Besides the recent “Polygon(e)” spat, things got heated last year when Gauntlet left its position at Aave and started teaming up with Morpho.
Soon after that, they were at odds again, arguing about how to handle risk when users got liquidated during the Renzo’s ezETH depeg event.
While this whole thing might sound like just ex-colleagues squabbling online, it highlights something really important: keeping DAO governance healthy and working is serious business.
History is full of examples of what happens when DAO voting isn’t taken seriously. Remember the $25 million governance “attack” Compound suffered last July? Or back in 2022, when a bad proposal basically broke Compound’s $830 million ether (ETH) market for a week?
And just last month, Maker DAO had to make emergency changes to borrowing rules because of whispers of a takeover attempt.
DeFi doom and gloom
And if all that wasn’t enough, the latest crypto sell-off is really cranking up the heat in DeFi. The sector has seen its TVL plummet by over a third – from a recent high of $138 billion on December 17th to just under $88 billion now.
Turns out, even the big players are feeling the pain. Donald Trump-backed World Liberty Financial is apparently “down bad,” cursing ETH just like the rest of us.
Read more: Liquity scare hits DeFi as Ethereum Foundation sinks $120M into sector
As financial markets went into freefall yesterday, the crypto world saw nearly $900 million in liquidations, data from Coinglass shows.
And in DeFi land, people were glued to their screens watching one whale’s risky 65,000 ETH ($123 million) position. Everyone was holding their breath, worried that if it got liquidated, it could trigger a cascade effect in the market.
Got a tip? Send us an email or ProtonMail. For more informed news, follow us on X, Instagram, Bluesky, and Google News, or subscribe to our YouTube channel.
