Our first proposal, Reduce COMP emissions by 20%, focused on providing a healthy amount of COMP for governance to utilize. Previously, the protocol was spending 0.5 COMP / block on liquidity incentives to borrowers and lenders. However, after our proposal (and proposal 10), the protocol’s Comptroller contract now holds a treasury that grows by 0.148 COMP / block and spends 0.352 COMP / block on liquidity incentives. But how exactly can governance spend this treasury? The answer to this question is a bit more complicated.
Currently, the Comptroller doesn’t have a particularly clean way for governance to grant COMP to a specific address. This means that the barrier to making payments is higher than it needs to be, especially for less technical proposal authors. Moreover, it would be convenient for Governance to be able to stream payments to participants, akin to a subscription. For instance, Governance may vote to pay for development of new features via quarterly payments.
Robert’s post a few months back describes a plethora of new ways the community can contribute to Compound. The post details how COMP grants will enable a number of improvements for both smart contract changes and risk management. Recent events, such as the Dai liquidations, have increased the urgency for a COMP grant feature, as the community has proposed a number of items that require such grants. These items that have come up since Robert’s post include:
- Reimbursing those liquidated during the Thanksgiving liquidation event, as proposed by MrHen
- Paying for the development of new features and risk monitoring tools (c.f. Robert’s post on Dai Market Risk)
- Retrospective airdrop to early COMP users (akin to the Uniswap airdrop), proposed by Ali Yahya
As part of our work on adding vesting to the protocol, we added these features in a pull request. Given the recent increase in urgency for a simple mechanism for governance to make payments, we will split this pull request into three:
- Proposal to add one-time and streaming grants (PR)
- Proposal to add vesting within the protocol (PR)
- Proposal to set the vesting parameter based on community feedback
We wrote a high-level specification that goes through the technical components added. Furthermore, we commissioned an audit of both the grant and vesting related changes by Quantstamp. There are no major issues with the changes, in spite of the relatively large surface area touched by the vesting changes. Given that the vesting changes affect economic behaviors within the protocol, especially for those building on top of the protocol, we are taking a more cautious approach and testing these changes on testnet over the coming weeks. We request that community members who integrate Compound within their products, such as wallets and exchanges, try out vesting and provide feedback, should this change cause any disruption to your product.
We are going to test out this feature by paying Gauntlet for the development costs associated with this change. This grant will cover:
- Development costs for CP030
- Audit costs
- Development costs for the future vesting proposal (which we have already implemented and is linked above)
We hope this will be the first of many COMP grants to community contributors.
You can expect to see this proposal on the Compound governance portal shortly.