$25 Million siphoned out of Compound (COMP) Treasury in the most recent governance hack attack

The Compound Finance (COMP) treasury has been completely wiped clean by a recent governance attack which has cost the platform $25 million, thus increasing concerns regarding the state of decentralized governance in the decentralized finance (DeFi) space.

Initially, the attack was disguised as an unsolicited suggestion to reward 92,000 COMP tokens submitted on the Compound DAO forum.

While the project’s security advisor, Michael Lewellen, highlighted several glaring red flags, the warning barely evoked any response from the community, with only several members, including MonetSupply, and Wintermute, expressing their concerns.

Despite the multiple glaring red flags seen pointed out by the projects security advisor Michael Lewellen The warning was met with the minimum resistance from the community with only MonetSupply and Wintermute taking their concerns.

But the plot twisted to the worse when Humpy came back with the third proposal asking for 499,000 COMP tokens – a 5. It was the four times as much as the initial 92,000, apparently. Remarkably, the management of this proposal was done effortlessly, receiving only 57 votes from the addresses.

Humpy Is Not A House Hold Name and That We Were Wondering How Did This Person Manage to Gain So Much Power? 

Humpy has keenly taken part in the aforementioned DeFi protocols with the help of StableScarab where it flexibly navigates through incentives to gather humongous governance tokens. These strategies helped him to achieve a considerable amount of control over Balancer which is an Ethereum-based automated market maker in 2022 and now he is targeting Compound.

The researcher highlights that this incident unveils a critical issue in DeFi governance: The last one is described as ‘the illusion of decentralization. ’

While the Compound DAO is described as a decentralized organisation for decision-making, it is mainly noted by StableScarab that only 20 addresses engage in governance vote.

According to the researchers, should even radical ideas be produced, the general public appears to pay little attention, and this at least is suggestive of ignorance or apathy.

Furthermore, the Compound team itself does not seem enthusiastic; the official @compoundfinance X is summarily inactive at the time of writing, hours later.

This raises questions about the true nature of the protocol’s governance structure, as it seems Gauntlet, a paid advisor, effectively runs the DAO. StableScarab further noted:

Humpy’s influence goes beyond governance. He has his own token, @Gold_On_Chain, for his ‘Golden Boys’ community. After today’s Compound event, $GOLD’s value doubled as speculators bet on Humpy’s ability to continue finding “highly profitable” governance/farming strategies.

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.

In addition to that, it has extended the bearish trend for the token which has been declining since the bull run that was in 2021, the token reached an all-time high of $910 in May the same year and as of now the token is down by about 95%.

One can only wonder what other notices the Compound team will launch to investors and what more revelations will be made following the exploit.

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