Compound’s Proposal 289 nearly transferred 499,000 COMP, worth approximately $24 million, to a group of wallets that had accumulated their voting power during the final 34 minutes of the ballot. A study of 48 Ethereum DAOs conducted by the Max Planck Institute and Vrije Universiteit Amsterdam found that registration, staking, and delegation concentrate practical voting power among a small group of participants. In 39 of these 48 organizations, the ten largest holders controlled more than half of the voting power, while 14 registration-based DAOs had intermediary wallets controlling more tokens than the entire registered electorate. Compound added a veto after the incident, but this protection necessarily gives someone more control, illustrating the central dilemma of DAOs between pure automation and human safeguards.
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