Months before the Compound Foundation asked for $52 million to build the next version of the protocol, a community member warned that a big funding request was coming and questioned whether the Foundation was building up voting power ahead of it.
The prediction was off but only because the eventual request was much bigger.
- Compound is one of crypto's oldest lending protocols, letting users borrow and lend crypto.
- It currently has roughly $1.6 billion locked across its markets, according to DefiLlama data.
- Its rules and treasury are controlled through a DAO, where holders of the COMP token can vote themselves or hand their voting power to delegates.
The warning came in February
On Feb. 10, a pseudonymous Compound forum user called "twinker" criticized a Foundation proposal to take control of about $8.4 million in old reserves left over from Compound v2.
The proposal said the money could be used for protocol operations and to keep enough COMP available for governance. But twinker argued the plan looked more like "buying more COMP and delegating to ourselves."
Twinker estimated that request could come in at "$10–20M or more." In April, less than two months later, the Foundation asked for $52 million over two years to build and launch V4.
- About $14 million was requested upfront, with the rest tied to future milestones.
Then the voting controversy surfaced
The February warning gained new weight this week after Compound forum user Ugur Mersin accused the Foundation of misusing those old reserves.
Blockchain data reviewed by blockchain analytics firm Bitquery shows that almost all of the roughly $8.4 million was eventually converted into COMP. About 345,000 COMP bought with the reserves landed in a DAO wallet less than an hour before voting power was measured for the V4 proposal.
The Foundation then voted in favor of the V4 funding package with those votes included.
Bitquery found that the reserve-funded COMP made up more than a third of the Foundation's total voting power.
The extra votes didn't decide whether V4 passed. Nobody voted against the proposal and it would have cleared the required threshold without them.
The Foundation says it did nothing wrong
The Compound Foundation has denied misusing the reserves.
In a response posted to the governance forum, the Foundation said Proposal 536 authorized it to use the reserves for "protocol operations and governance continuity," including keeping enough COMP available for "governance execution."
It said the DAI was converted into COMP under that mandate, while stressing that "the assets remain DAO-owned" and that none were spent on Foundation operations.