Since the launch of governance last summer, the Compound community has shepherded the protocol through a period of remarkable growth. Under the community’s watch the protocol has seen significant expansion across every relevant metric, from loans outstanding to TVL to net revenue. This period also witnessed a number of community-led upgrades to the core protocol itself, including the Governor Bravo migration and the Oracle Improvement, among others. These not only represent meaningful upgrades to the system, they also speak to the quality of the Compound community and its ability to shepherd the protocol into the future.
Like any community-led project though, growing pains are to be expected. To leverage the power of open-source development is to accept certain new risk tradeoffs, and Compound is no different. The protocol has benefited greatly from the open-source model, drawing on a great deal of third-party developer talent and resources to upgrade the protocol and extend its core capabilities. At the same time, the very properties that make this model so compelling (openness, permissionless, etc) can also introduce new risk vectors when not properly managed. We saw this recently with Proposal 62.
But the takeaway from 62 should not be a retreat from the open-source model that has otherwise served Compound so well. It should instead be an opportunity to give the community the resources and support it needs to contribute to the protocol in a safe and responsible manner. Doing so will allow Compound to continue to harness the benefits of community development while mitigating the accompanying risks.
This brings us to the OpenZeppelin proposal, which we think is positioned to do exactly that. OpenZeppelin not only has an industry-leading reputation among blockchain security firms, it also has extensive experience working on the Compound protocol itself, including 10+ audits as well as its work on the OpenZeppelin Governor contracts. Enlisting a firm of this caliber will give community developers the support they need to do their job effectively, while also ensuring the protocol remains safe.
While the proposal does come with a high nominal price tag, it ultimately seems reasonable given the quality of OpenZeppelin’s offering, the demand for similar services across the industry, and the need to safeguard Compound following Proposal 62. And furthermore the short contract term (and quarterly repricing options) allow the community to assess OpenZeppelin’s performance in relatively short-order and determine whether it’s worthwhile to renew.
We appreciate OpenZeppelin’s hard work in crafting a thoughtful and detailed proposal and also incorporating feedback from the community. In terms of next steps, we defer to the community’s view on timing/process, though at this point we are supportive of this proposal moving towards a formal vote. We welcome any additional thoughts or feedback that the community might have.
Jeff Amico
a16z
Disclosure: a16z is an investor in Forta, a blockchain security platform that was recently spun out of OpenZeppelin. a16z is not an investor in OpenZeppelin.