Compound DAO faces calls for more oversight amid conflict of interest claims

However, Gauntlet has defended the proposal, citing issues such as “ongoing lawsuits, Labs hands tied, market share eroding” as reasons for such a move, as well as stressing the proposal is not self-serving in highlighting the fee structure, and the fact that Gauntlet’s Morpho earnings are already capped.

While Gauntlet’s proposal states that “Compound DAO will be the sole owner of the vaults and will accrue all revenue generated during the joint incentives trial program,” it adds that, in future, and subject to DAO approval, “Gauntlet may introduce a fee-splitter contract as revenue share for the work Gauntlet performs as the vaults’ Curator.”

Gauntlet’s Vice President of Growth, Nick Cannon, has hit back at criticism on X, which he calls “approved comms” from a “worried” Aave camp, also claiming that Gauntlet was censored during its time at Aave.

Polygon Labs’ CEO also claims that Aave pressured teams during governance votes.

This is not the first time that Gauntlet, Aave, and Morpho have come into conflict. Aside from the recent “Polygon(e)” controversy, tensions flared last year when Gauntlet walked away from its role at Aave and began working with Morpho.

Shortly after, the protocols argued over their respective approaches to risk when users were liquidated during a depeg of Renzo’s ezETH.

While the spat may seem to be nothing more than two sets of former colleagues bickering on the timeline, maintaining healthy and functional DAO governance processes is a serious business.

Multiple precedents have been set by a lack of attention to DAO voting, such as the $25 million governance “attack” suffered by Compound last July. Previously, in 2022, Compound’s $830 million ether (ETH) market was bricked for a week when a proposal had unintended consequences.

Elsewhere, Maker DAO made emergency changes to borrowing restrictions in response to rumors of a takeover plot just last month.

DeFi doom and gloom

The latest crypto sell-off continues to pile on the pressure in DeFi; the sector has seen TVL plunge by over a third, down from its recent peak of $138 billion on December 17 to just under $88 billion today.

Even those pulling the strings were left out of pocket, as the Donald Trump-backed World Liberty Financial is reportedly down bad, cursing ETH just like everyone else.