In this discussion, governance experts Andrew Hall, Eddy Lazzarin, 0xShuel, and smc90 delve into the nuances of governance attacks, focusing on a recent incident involving Compound. They tackle the fine line between legitimate and malicious voting in decentralized networks. The conversation also explores strategies to prevent governance manipulation, emphasizing the differences between on-chain and traditional political systems. They propose innovative solutions to enhance participation and decision-making within decentralized autonomous organizations (DAOs), fostering both transparency and community trust.
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The Humpy Proposal
A pseudonymous persona named Humpy proposed transferring Compound tokens to a multi-sig wallet controlled by the "Golden Boys."
The proposal failed twice before unexpectedly passing on the third attempt due to Humpy using previously unrevealed wallets.
insights INSIGHT
Not a Typical Attack
The Humpy incident wasn't a typical "attack" like a 51% attack, as it didn't immediately drain the treasury.
It aimed to transfer a modest amount of power, potentially giving Humpy more control, but was ultimately canceled due to community disapproval.
insights INSIGHT
Off-Chain Consensus
Legitimate governance requires off-chain consensus and dialogue before on-chain voting.
Humpy's proposal lacked proper socialization among Compound delegates, raising concerns.
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with @ahall_research @eddylazzarin @0xShuel @smc90
In this episode, we cover both recent events + evergreen governance questions in political systems: Specifically, we breakdown the recent Compound “governance attack”... as well as the broader topic of DAO governance and voting in general. We also discuss how to avoid, prevent, and respond to such governance attacks -- highlighting key differences between on-chain/ token-based/ digital voting systems vs. physical-world political systems around the world.
What happens when you have activity from actors that the majority doesn’t necessarily agree with? How do you distinguish between good-faith and bad-faith activity, especially on-chain? And other such tricky questions?? Our experts answering these questions (in conversation with Sonal Chokshi) include:
- a16z crypto CTO Eddy Lazzarin; - head of network operations Ross Shuel; - and a16z crypto research collaborator, and Stanford professor of political science, Andrew Hall.
The episode begins by quickly recapping the exact sequence of a recent Compound governance “attack” event a few weeks ago -- including discussing whether “governance attack” is the right label for it or not; how it’s different from other attacks; and the broader trend of online vs offline governance attacks in general -- before then going into specific solutions. The team also shares some behind-scenes tick tock on what happened, how people figure out motives behind actions on-chain (especially given the "indistinguishability problem"), and much more.
Pieces mentioned in this episode and other resources:
As a reminder: None of this should be taken as business, investment, legal, or tax advice; please see a16z.com/disclosures for more important information -- including a link to a list of our investments.
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