The Compound DAO's use of protocol reserves to purchase COMP tokens has sparked a governance dispute between the Foundation and delegates.
According to on-chain data from Bitquery, 344,780 COMP arrived in a DAO reserve wallet at 09:46 UTC on May 5, approximately 58 minutes before the voting snapshot for Proposal 582. The wallet had delegated its votes to the Compound Foundation, which supported the proposal.
Voting Power Impact
The timing gave supporters 50.1% of the 3,757,805 total delegated votes available for the proposal. Without the 344,780 COMP from reserves, the same group would have held 45.1% of voting power, leaving enough outside their bloc to potentially defeat the plan.
Proposal 582 ultimately passed with 1,883,966 votes in favor and zero votes against, exceeding the required quorum of 400,000 votes. The proposal allocated $14 million to a Foundation-controlled operational wallet and $38 million to a Treasury Management Committee pool, with releases tied to milestones.
Mandate Dispute
On September 27, Compound forum delegate ugurmersin alleged that the reserve conversion and vote delegation breached the DAO's reserve mandate. The Foundation responded on September 28, stating that the conversion was consistent with the mandate's governance-continuity purpose and that the COMP remained DAO-owned with no assets spent on Foundation operations.
The purchase's authority traces back to Proposal 536, which placed approximately 8.42 million DAI of protocol reserves under Foundation stewardship for protocol operations and governance continuity. The Foundation and the delegate disagree over whether converting those reserves into voting power falls within those defined limits.
While Proposal 582's outcome is settled, the authority to make the reserve conversion remains contested.
