Governance Roundup: What DeFi protocol communities are discussing and debating

Quick Take

  • In addition to major feature launches, many protocols have minor parameter decisions (e.g. changing interest rates in MakerDAO) that must be made by token holders
  • Most of the governance happens on forums, where users submit proposals and ideas, and community members give their feedback
  • The first layer of voting is typically informal to gauge interest, and then proposals are moved to token holder voting (or execution via a multi-signature signers)

This research piece is available to
members of The Block Genesis.
You can continue reading
this Genesis research on The Block.

Compound Introduces Autonomous Proposals for Delegated Governance

Compound – the leading US lending protocol – has launched Compound Autonomous Proposals (CAPs).


Autonomous Proposals are a new type of smart contract allowing users with at least 100 COMP tokens to submit a governance draft. When 100,000 COMP is delegated to the proposal address, a function is called which triggers a formal governance vote.

Given the current threshold of 100,000 COMP needed to create a proposal, CAPs allow smaller holders to make proposals while mitigating the risk of spam due to a 1% of tokens needing to be delegated towards the vote. While CAP tokens are locked during the delegation period,  proposers can either wait for the proposal to pass or terminate the proposal, ending the CAP and returning the COMP to the creator’s wallet.

For perspective, the change to 100 COMP for a CAP is a reduction of 1/1000 of tokens required. In US dollars, that is equivalent of 180,000,000 USD for a formal governance proposal as opposed to 18,000 USD needed to start a CAP.

The launch of CAP’s was kicked off by a vote to set the Pause Guardian to a 4-of-6 community multisig, signalling the first of many community-oriented proposals to further decentralize control of a leading DeFi protocol.

Alongside CAPs, Compound also released documentation on the allocation of the 775,000 COMP set aside for future incentives. With 500,000 COMP allocated to Coinbase Earn campaigns, the remaining 225,000 will be allocated to a community-owned Resovoir contract for future governance incentives.


With the launch of CAP alongside a reduced COMP emission schedule, it’s clear that Compound is taking a strong stance on progressive governance. With the ability for smaller tokenholders to be more active in governance, we expect Compound’s delegation feature to see a lot more use in the coming months.

In the meantime, be sure to stay up with Compound by following them on Twitter.

The post Compound Introduces Autonomous Proposals for Delegated Governance appeared first on DeFi Rate.

New Compound Governance To See All Future COMP Token Distributions Locked In A Vesting Schedule

A new Compound governance proposal from Tarun Chitra, the founder of Gauntlet, would see all future COMP token distributions locked in a vesting schedule.

It has been reported that the proposal was submitted on Wednesday and highlights several ways that the vesting could be implemented.

However, one would involve discrete vesting where the tokens could be claimed at periodic intervals, while another proposes “continuous vesting” that frees tokens gradually as they reach maturity.

According to the report, either solution would be in stark contrast to how the reward system is set up right now, where the vesting time is effectively zero.

While COMP is not immediately distributed into user wallets, it can be claimed at any point in time either by interacting with the protocol or explicitly calling a claim function, as this is mostly a gas-saving measure.

It has been analyzed that with no vesting, yield farmers can simply pool their liquidity to earn COMP and immediately sell it on the market. This has resulted in a somewhat perverted incentive that goes against the stated purpose of the COMP distribution.

Moreover, the idea behind it is to distribute ownership and governance of the platform to its users, but in reality, the distribution is currently dominated by whales that are looking for an instant profit. 

By adding vesting would discourage “purely capitalist yield farmers,” as Robert Leshner, the CEO of Compound Labs, referred to them, from committing their capital to the protocol for a short-term gain.

Likewise, if the proposal were to pass, it could have a powerful effect on the current DeFi ecosystem.

While Compound is rarely the most remunerative yield farming protocol, it has been the most stable and high volume source of yield, largely due to its relatively steep distribution curve and high market capitalization. 

It has also been analyzed that tightening the yield tap through vesting could result in much of the capital unwinding, sending Compound and likely Maker’s total value locked downward. 

Due to a somewhat widespread belief that TVL reflects the protocol’s success this could result in token prices going down as well. On the other hand, the selling pressure would be lowered significantly, which could have a counterbalancing effect.

Thus, the decision would significantly limit a major portion of total liquidity mining revenue, most likely affecting all other protocols in some way.

Source: Cointelegraph | Image: Cryptocurrency Hub

The post New Compound Governance To See All Future COMP Token Distributions Locked In A Vesting Schedule appeared first on Crypto News Point.