The researcher highlights that this incident unveils a critical issue in DeFi governance: "the illusion of decentralization.” While Compound decentralized autonomous organization (DAO) is touted as a decentralized decision-making body, the reality, in the words of StableScarab, is that a mere 20 addresses typically participate in governance votes. The researchers claim that even when contentious proposals are put forth, the broader community remains largely indifferent, seemingly unaware or unconcerned with the implications.
Compound DAO Hijacked According to researcher DeFi Ignas, the attack began with an initial proposal to grant 92,000 COMP tokens, submitted without prior discussion on the Compound DAO forum. Despite "glaring red flags” identified by the project’s security advisor, Michael Lewellen, the warning received minimal engagement from the community, with only a few voices, such as MonetSupply and Wintermute, raising concerns.
On the other hand, the Compound’s native token COMP has retraced over 1% in the last 24 hours and over 7% in the past week alone in the wake of the latest deemed governance exploit. Additionally, this has further exacerbated the token’s ongoing downtrend since the 2021 bull run, which saw the token hit an all-time high of $910 in May of that year, and is currently down nearly 95% from that level. It remains to be seen what communications the Compound team will issue to investors and what other findings will come to light in the wake of the exploit.
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