This article reviews the Golden Boys’ governance attack on Compound DAO, the settlement reached, and the broader implications for DAO governance and security.
Points
- Overview of the Golden Boys’ governance attack on Compound DAO.
- Settlement details and new governance instrument.
- Broader implications for DAO governance and security.
- Recommendations for improving DAO governance structures.
Key Takeaways from the Golden Boys’ Attack on Compound DAO
Allegations were made that the Golden Boys committed a governance attack and attempted to steal from the DAO’s treasury. While the Golden Boys denied those allegations, the group — to everyone’s surprise — agreed to settle with Compound on the condition that a similar yield-bearing instrument be created and controlled by the DAO. Prior to that truce, the Golden Boys also addressed the community’s security concerns on Compound’s message boards and took steps to mitigate the risk of vault theft by implementing a Trust Setup function.
Governance attacks are typically characterized as self-serving exploits that enrich the attacker to the detriment of other parties, but the Golden Boys’ behavior doesn’t quite fit the bill. To the contrary, this months-long governance struggle had all the hallmarks of an activist investor, not a scammer.
https://x.com/DefiIgnas/status/1817928935490867309
While Golden Boys’ efforts turned out to be an unexpected, welcomed bonus for Compound DAO’s token holders — who now have the option to earn extra passive income — the incident raises doubts about how much organizational trust, transparency, and democracy DAOs actually have. Furthermore, even though this DAO drama ended on an amicable note, what happens when the next round of proverbial golden boys aren’t so nice?
Some random team called “the golden boys” just got a vote passed for $25m（!） out of compound DAO for some weird yield farming proposal.
https://twitter.com/DrNickA/status/1817656164638937237
Activist investors can be white knights who maximize shareholder value, but they can also be bullies that drive companies into the ground. Bryan Burrough’s “Barbarians at the Gate” illustrated such a demise. Therefore, DAOs need to have protections in place — like legal agreements and voting participation mechanisms— to ward off activist investors and prevent governance attacks that go awry.
Recommendations for Improving DAO Governance
- Incorporate as LLCs: DAOs should incorporate as limited liability corporations （LLCs） to protect members from personal liability and allow for custom governance structures.
- Governance Participation: Evolve governance participation by avoiding vote timing during low participation periods （e.g., weekends） and exploring AI proxy voting to ensure consistent participation.
- Transparent Processes: Implement clear and transparent processes to build trust and ensure that governance decisions reflect the community’s interests.
- Security Measures: Enhance security measures, such as the Trust Setup function used by Compound, to mitigate risks and protect treasury assets.
解説
- Governance Attacks: The Golden Boys’ attack on Compound DAO highlights the vulnerabilities in DAO governance structures, emphasizing the need for robust security and transparency.
- Activist Investors: The incident underscores the dual nature of activist investors, who can either add value or pose significant risks, necessitating careful management and oversight.
- Legal Protections: Incorporating DAOs as LLCs can provide legal protections and governance flexibility, helping to safeguard members and enhance organizational resilience.
- Participation and Security: Improving governance participation and implementing security measures are critical steps for DAOs to prevent governance dysfunction and protect their assets.