preferred on
Points of Focus
- 344,780 COMP linked to DAO reserves reached a safe 58 minutes before the snapshots.
- The tranche lifted the eventual FOR bloc from 45.1% to 50.1%, Bitquery found.
- The foundation said Proposal 536 allowed the use; a delegate disputes that reading.
Compound decentralized autonomous organization (DAO) reserves were converted into COMP that added 344,780 delegated votes shortly before two major governance snapshots, according to an onchain reconstruction by Bitquery.
The Compound Foundation has since responded, saying Proposal 536 authorized the conversion and that the assets remain owned by the DAO.
Proposal 536 moved 8.42 million Dai (DAI) from Compound v2 reserves into a four-of-six safe in February. Bitquery traced the funds through USD Coin (USDC), a trading desk, and Binance before 344,780 COMP reached the safe.
Internal Binance account movements are unavailable onchain. Bitquery found that the same trading desk sent 75,000 COMP into the Binance deposit account that received the reserve-linked USDC, providing an additional link between the two sides of the reconstruction.
Compound operates in the wider decentralized finance (DeFi) lending market, where token governance and treasury structures can determine how protocol capital is deployed.
344,780 COMP arrived 58 minutes before the snapshot
The safe received 344,780 COMP at 09:46 UTC on May 5, 58 minutes before the snapshot for Proposals 580 and 582. Four of its six signers had delegated its voting power to the Compound Foundation on April 14.
Proposal 580 established a Treasury Management Committee. Proposal 582 approved a $52-million Compound v4 program, including $14 million for operations and a $38-million reserve subject to milestone-based releases.
Multisig controls have also drawn scrutiny elsewhere in DeFi, including after the Drift Protocol breach.
Reserve COMP lifted the FOR bloc above 50%
Wallets that eventually voted FOR held 1,883,966 COMP at the snapshot, or 50.1% of reconstructed voting power. Without the 344,780 reserve-funded COMP, the same bloc held 1,539,186 COMP, or 45.1%.
Both proposals passed with zero AGAINST votes, so the additional COMP did not change the recorded outcome.
Bitquery identified a foundation-delegated wallet holding 100,024 COMP linked to the same trading desk. Transfers to the desk’s Binance account began 28 minutes after Proposal 580 closed.
The episode adds to scrutiny of capital structures across DeFi lending markets and wider governance risk in DeFi.
Foundation said Proposal 536 covered the COMP conversion
The Compound Foundation said Proposal 536 covered reserve management for “protocol operations and governance continuity,” including maintaining sufficient COMP for governance execution. It said the assets remain DAO-owned, none had been spent on foundation operations, and that there had been “no trading.”
Compound delegate “Ugurmersin” disputed that interpretation, arguing that Proposal 536 did not authorize delegation of the resulting COMP to the foundation. The delegate pointed to the post-vote transfer of about 100,000 COMP toward Binance.
Bitquery noted that Proposal 535, approved the same day, explicitly allowed assets to be converted into COMP and delegated for governance. Proposal 536 contains no equivalent delegation language.
The onchain record establishes the transfers, delegation, and timing. The remaining dispute is whether Proposal 536 authorized the foundation-delegated use of DAO-funded COMP.
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