Compound DAO faces governance dispute over reserve conversion

A governance dispute has emerged within the Compound DAO regarding the use of protocol reserves to acquire COMP voting power. A delegate alleged that a reserve wallet, administered by the Compound Foundation, acquired 344,780 COMP tokens and delegated those votes to the Foundation shortly before a critical voting snapshot in May.

An on-chain reconstruction by Bitquery traced the movement of reserves through USDC and an exchange-linked trading desk, noting that the COMP arrived in the reserve wallet 58 minutes before the snapshot for Proposals 580 and 582. While the link between the spent reserves and the incoming COMP is described as strong due to the use of an exchange, Bitquery noted that public chain data alone cannot definitively prove the specific off-chain trade.

The acquisition resulted in supporters holding 50.1% of the delegated voting power, a threshold that would have been 45.1% without those specific tokens. Despite the controversy, the proposals passed with no recorded opposition. The Compound Foundation maintains that the conversion was consistent with the mandate of Proposal 536, which authorized the stewardship of reserves to support protocol operations and governance continuity, asserting that the assets remain DAO-owned.