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Lisa
@eellaoh99
Title: CompoundDAO's Setback: A Catalyst for Voting Bloc Entropy Propose On July 28, 2024, CompoundDAO’s governance suffered a blow when Proposal 289 allowed a group known as the “Golden Boys” to take control of $24 million from the DAO’s treasury. Though the proposal wasn’t inherently malicious, it exposed a serious flaw in the DAO’s governance system—voter apathy. With only 7% of token holders participating, this case sheds light on the limitations of existing decentralization metrics like the Nakamoto Coefficient, which often misses risks related to how voting power is controlled.
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Lisa
@eellaoh99
1. Token-Centric Metrics Are Insufficient Common metrics like the Nakamoto and Gini Coefficients primarily track how tokens are distributed across wallets, offering a simplified view of decentralization. They overlook critical governance dynamics, like who controls those wallets. Consider WhaleDAO and MinnowDAO—on paper, MinnowDAO appears more decentralized because its tokens are split across more wallets. However, if one person controls the majority of those wallets, real decentralization is a facade. This is exactly how the Golden Boys manipulated CompoundDAO ‘s voting mechanism, controlling multiple wallets but ultimately consolidating voting power. These token-centric metrics also fail to account for practices like bribery, collusion, or even groupthink, which further concentrate power within DAOs. Measuring decentralization accurately requires more than just counting wallets; it needs to consider how influence is distributed and exercised.
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