Compound's Future: Three Paths

[cylon]

Simple Summary

The Compound DAO is at a crossroads, facing critical decisions on its future direction. Recent debates in the community have centered on three main paths: (1) granting Alpha Growth significant control over the protocol’s strategy, (2) fostering collaboration with Morpho to remain competitive in DeFi lending, or (3) restructuring DAO operations to establish clearer leadership and governance.

Each of these options presents trade-offs in how the protocol evolves and how governance is structured. The DAO must now align on a path forward to maintain its competitiveness in a rapidly shifting market. This post aims to break down the key choices and their implications, opening the discussion for the community to determine the best course of action.

Background

I’m sharing this perspective as an independent delegate. For over three years, I served as Compound’s Protocol Security Advisor on OpenZeppelin’s behalf until I left the company in December 2024. I remain engaged with the Compound community through the CGP Security Tooling Domain but have largely stayed out of recent forum discussions. However, multiple community members have recently asked me to weigh in as tensions have escalated.

The current debates revolve around the Alpha Growth Renewal, the Morpho <> Polygon Collaboration, and broader discussions on DAO operations and protocol improvements. These conversations span multiple forum threads, highlighting a growing sense of frustration:

• [AlphaGrowth] 2025 Compound Growth Program V3
• [AlphaGrowth] Growth Program Organizational Structure
• Compound <> Morpho <> Polygon Collaboration
• Dao Ops Concerns
• Temperature Check: Compound v4
• Compound Sandbox: Development Proposal

Ultimately, all these discussions boil down to a fundamental question: How does Compound remain competitive, and what role should the DAO play in achieving that?

The Three Paths Before Us

My proposal here is to cut through the noise and boil all the competing visions into three clear paths that the DAO should decide on. They are:

1. Alpha Growth Direction - Centralizing leadership under Alpha Growth
2. Morpho Collaboration - Aligning with Morpho to remain competitive.
3. DAO Operationalization - Establishing a structured governance model for Compound’s future.

1. Alpha Growth Direction

The latest 2025 Compound Growth Program Proposal would grant Alpha Growth dominant influence over Compound for the next year. The proposal allocates $7 million in COMP for salaries, security, grants, incentives, and other areas beyond their original growth mandate.

Alpha Growth has undeniably contributed to Compound’s growth over the past year, but this proposal effectively places them in control of the protocol’s direction. It also creates potential friction with existing vendors such as OpenZeppelin and CGP by overlapping responsibilities. With this proposal, Alpha Growth will effectively be driving all major decisions, whether explicitly mandated or not.

While I personally disagree with the cost and structure of this current proposal, I acknowledge the clear benefits of having a single organization own protocol leadership. If Alpha Growth is to take on this role, the proposal should explicitly state this and outline how existing DAO vendors and programs will be integrated under their leadership.

2. Morpho Collaboration

The recently passed Morpho <> Polygon <> Compound collaboration proposal lays the groundwork for a long-term partnership between Compound and Morpho, rather than direct competition. Facilitated by Gauntlet, this initiative has the DAO deploying and managing Morpho Vaults on Polygon, filling the gap left by Aave’s departure from the network. Compound will receive all revenue generated, with the potential for Gauntlet to receive fees later through a DAO-approved split.

The implication of this proposal is clear: Morpho is more competitive than Compound V3 Comet Markets. Morpho markets have outperformed Compound in attracting TVL since launch. The curator model enables faster asset listings, risk parameter adjustments, and better incentive alignment than Compound’s DAO-managed risk approach.

By aligning with Morpho, Compound would shift towards leveraging its brand, treasury, and TVL to deploy more Morpho vaults over time. This would position Compound and Morpho to compete directly with Aave rather than each other.

While the Morpho <> Polygon proposal has passed, the DAO still has the choice to fully commit to this strategy or instead focus on maintaining and improving the existing Compound protocol. Does the DAO prioritize value accrual through the best available lending protocol (even if it’s not Compound) or invest in further development of Compound’s existing infrastructure?

3. DAO Operationalization

The third path is recognizing the DAO’s leadership gap and filling it with a structured operational team. Since Compound Labs stepped back from actively guiding the protocol after launching Compound V3, leadership has been fragmented and ad-hoc. DAO contributors, including myself, have attempted to fill the void, but the lack of structure remains a challenge.

If the DAO does not pursue the first two paths—ceding direction to Alpha Growth or aligning with Morpho—it must build an internal leadership structure to remain competitive. A core team must be established to own the protocol’s development and manage DAO vendor relationships.

This path would likely involve launching a Compound V4 to address Comet’s shortcomings. A high-level discussion has already begun, but executing a new version will require operational leadership. WOOF, a current protocol contributor team, is already working on Compound Sandbox, offering more permissionless functionality, but I believe it falls short of the overhaul needed to compete with Aave and Morpho.

This is the most complex path, requiring sustained involvement from community contributors and delegates. However, if the DAO is unwilling to consolidate under Alpha Growth or shift to Morpho, it must commit to structuring internal leadership to drive long-term success.

Where do we go from here?

The next few months will be crucial in determining Compound’s future. The DAO must choose a clear direction to remain competitive in DeFi lending. The decision comes down to:

1. Centralizing leadership under Alpha Growth,
2. Partnering with a growing lending protocol like Morpho, or
3. Building an internal structure to lead the protocol’s future.

Other paths may emerge, but these three represent the most viable options that I see as available to the DAO today.

On a personal note, Compound has been a major part of my life, and I’ve had the privilege of working with many in this community. As the first major lending protocol and one of the pioneers of DAO governance, Compound has always been a trailblazer. Now, it must once again confront systemic challenges head-on and make difficult decisions to ensure its future longevity.

I leave it to the community to debate and decide. My hope is that by framing these choices clearly, we can have a productive discussion about the best way forward. Whatever path is chosen, it should be inclusive, transparent, and reflective of the community’s shared vision.

[cmrn]

Wow, thanks for summarizing. @cylon

@cylon

Centralizing leadership under Alpha Growth,

Tried that.

@cylon

Partnering with a growing lending protocol like Morpho

Trying that.

@cylon

Building an internal structure to lead the protocol’s future

The obvious way.

---

Very healthy discussion overall.

[dmitriywoofsoftware]

Each of the approaches will take different time frame. Is there any conflict to unite all the approaches?

[cylon]

Each of the approaches will take different time frame. Is there any conflict to unite all the approaches?

There’s potential to combine or borrow some elements of each path into another but I do believe each is a unique vision for how the protocol will move forward. For example, if we prioritize Morpho collaboration, what is the point of building Compound V4? If AG is given explicit leadership, what’s the point in creating a redundant DAO structure? etc.

At the very least, I believe one path should take priority over the others to ensure there is clarity of vision.

[bryancolligan]

@cylon

Thank you for laying out these three paths for Compound’s future, pretty clear breakdown, and I appreciate the clear structure you’ve provided. It’s a solid starting point for the community to dig into weighing in on the options:

1. On centralizing leadership under AlphaGrowth: I get that streamlining processes is scary but to iterate fast the DAO needs more coordination. AlphaGrowth does not have the voting power for centralization. The beauty of the DAO is that the community can always vote us out if they’re not happy. Honestly, I’d challenge any major delegate who’s had issues with our services to speak up, let’s get that feedback on the table and address it head-on. Instead of community member who’s grants we blocked @cmrn, or other service providers.
2. Gauntlet + Morpho collaboration idea is an interesting experiment and could work, but it’s worth noting that Gauntlet’s sitting on 370k votes now. That’s a centralized chunk of influence in its own right, just with different players. This should be also considered as implicit centralization without clear mandates.
3. Establishing a DAO leadership model—this is the one we’ve been pushing for a while, right? We pitched something similar here (https://www.comp.xyz/t/alphagrowth-growth-program-organizational-structure/6186), but the DAO voted it down. Maybe it’s time to revisit that discussion? Could be the community’s sentiment has shifted, or we just need a sharper proposal to make it stick.

My best advice is to do 1 and 2 and work towards 3 one business unit at a time.

Thanks again for kicking this off, Michael. Looking forward to seeing where the conversation goes.

[cylon]

The beauty of the DAO is that the community can always vote us out if they’re not happy.

Under the current proposal, the DAO would not have the ability to “vote out” Alpha Growth for an entire year, nor would there be any mechanism to claw back the $7M budget once allocated. If the funding were structured through the Aera-powered Vendor Payment Streaming system—like those used by OpenZeppelin and Gauntlet—the DAO would retain more control.

As it stands, Alpha Growth is set to receive the largest budget in Compound DAO’s history with no built-in oversight. Additionally, multiple line items in the proposal overlap with existing program/vendor responsibilities. If this proposal is effectively granting Alpha Growth control over Compound’s direction, then let’s be explicit about it. The DAO may still vote on market deployments, asset listings, and treasury expenditures, but the $7M allocation is locked in regardless.

This is why I say Alpha Growth is effectively being given control of the protocol’s direction without openly stating it. If both Alpha Growth and the DAO community agree that Alpha Growth will be leading Compound’s strategic decisions, we should be upfront about it. That also means being clear on how this impacts existing DAO vendors and programs—defining their roles under Alpha Growth’s leadership rather than leaving it ambiguous. In this way, Alpha Growth and the protocol as a whole will be in a better position to succeed with a clear mandate.

Gauntlet’s sitting on 370k votes now. This should be also considered as implicit centralization without clear mandates.

The majority of Gauntlet’s voting power appears to come from its own holdings (~$15M in COMP), aligning its incentives with Compound’s success. While any major delegate holding significant voting power should be scrutinized (I’m certainly no fan of whales undermining community governance), Gauntlet’s Morpho proposal passed with over 1M COMP votes—meaning it would have succeeded even without their support.

At the core of this discussion, the takeaway from the Morpho <> Polygon proposal is simple: Compound, in its current form, is struggling to compete. The DAO must now decide whether to invest in further iteration of the protocol or pivot towards deeper collaboration with Morpho. That decision also affects the role Alpha Growth plays and whether its current budget allocation remains justified.

We pitched something similar here ([AlphaGrowth] Growth Program Organizational Structure), but the DAO voted it down.

Yes, and the model I’m proposing is different. Creating subDAOs simply fragments responsibility further and was voted down for good reason. What Compound truly needs is a core development team—a highly capable group that fills the long-standing gap left by Compound Labs, with the vision and execution capability to iterate on the protocol.

This is the missing piece. Without it, we find ourselves discussing partnerships with Morpho instead of strengthening and expanding the Compound protocol itself.

If Compound wishes to remain competitive on its own protocol stack, the DAO needs a small but highly competent team with direct ownership over protocol development and strategic direction. This team should not only drive innovation but also provide some oversight of the vendors and contributors that serve the DAO, ensuring a more structured and effective approach to Compound’s long-term growth.

[Pasha]

I honestly don’t think “Morpho Collaboration” name is the best fit. The recent proposal wasn’t authorized by Morpho, and Compound is free to work with as many protocols as it wants. I suggest the “Yield Aggregation” name.

@OneTrueKirk

Please note that while I find the proposal very exciting, it was not authored by the Morpho team.

The DAO must implement safeguards if the community chooses the second option—shifting Compound’s positioning toward a Yield Aggregation like Beefy.

Each integration with a third-party protocol should be wrapped in a native Compound smart contracts. This ensures that users interact with Compound’s wrapper rather than directly with the integrated protocol’s contracts.

Why it’s important:

1. Security: DAO retains control, allowing funds to be withdrawn from third-party protocol in case of black-swan events or any security breaches.
2. Ownership: DAO can define its own fee structure without being dependent on vendor terms.
3. Incentives: Users should be rewarded for engaging exclusively with Compound’s infrastructure, keeping value and attention within the ecosystem rather than diverting it to third-party protocols.

[antonttc]

I’m just here to comment on (2): (disclosure: I’m a Morpho fan, and I’m building on Morpho)

I think it’s worth mentioning that if going with (2), Compound should try to become the “prime lending brand” that works with other protocols aside from just Morpho. Euler, for example, is another good choice that’s even more similar to Compound’s original monolithic design.

The Morpho <> Polygon <> Compound Proposal should NOT be viewed as an ideal outcome of this path. Compound should actively try to negotiate between protocols to get the best deal. I see a great future for COMP if Compound stops playing passive and starts to play smart with its liquidity and brand.

[cylon]

@Pasha @antonttc I like the idea of considering the 2nd path a Yield Aggregation strategy that could include not just Morpho but Euler and other lending protocols as well.

[cmrn]

Having built Torque as an aggregator (not to stay that way forever but as a starting place) with factory-powered Compound credit lines a year ago, I just want to add context about entertaining “Compound as an aggregator”. There are many issues (like complete destruction of what gives Compound value today), but more, it’d relegate Compound down the ranks by an order of magnitude. What looks to be the clear choice (to me) is giving what otherwise would be a ragtag team a fighting chance against Morpho/Aave. If elected to lead, I commit to coordinating with any and all DAO-elected service providers (including AG if still around) to deliver the strongest product with pace. If the community prefers another direction, this will likely be one of my final engagements. I do thank the community for the opportunity and consideration. I will be in meetings with community members this week. Please PM your email if you’d like an invite.

[RexShinka]

If Compound is to thrive long-term it must be able to set its own path, rather than following the paths of others. For this reason, I am in favour of option 3. Following others will trust lead to decline. The Compound brand is extremely strong. I will put together a specific suggestion on to how we might lead in a separate post. Here, I’m just saying we should try to our own path which means option 3.

[robinnagpal]

If we treat the UI and Contracts as two separate and independently owned DAO components:

1. UI – Focuses on offering the best rates to users, with some preference for Compound’s contracts.
2. Contracts – Focuses on providing the best technology.

Additionally, Compound’s growth can be viewed through two distinct focus areas: Fees and TVL:

1. Fees – The UI helps collect and increase fees.
2. TVL – The Contracts help increase TVL.

Here, AG, Gauntlet or other providers can work on growing fees and TVL through separate pathways.

Woof, Cameron, PaperClips, DoDAO, and other providers can focus on developing individual components of V4 and improving V3(such as Sandbox and other features).

We need someone to ensure that these initiatives remain aligned, impartial, impactful, and measurable. I believe @cylon, @allthecolors, and @arr00 are the best candidates, as they have been with the DAO the longest, built trust with all stakeholders over time, and held individuals accountable when intentions were questionable. (I don’t know @arr00 personally, but based on his past initiatives, he has consistently been genuine, responsive, and focused on long term health of the protocol.)

To expand this list, I can recommend @pauljlei and @dmitriywoofsoftware. However, since they are part of service providers, potential conflicts of interest should be considered.

This approach supports both Fees & TVL growth while maintaining continuity for existing service providers like OZ, Gauntlet, AG, and Woof.

Additionally cap the payout for all on-chain proposals to max $2 million(or a bit lower), which means OZ, Gauntlet, or AG to submit 2(+) proposals annually. Any payouts above to be vetoed by multisig. Also all payments to be made via Aera vault, or transferred to community multisig for milestone based payments. This protects the DAO from draining any unexpected funds.

Compound still has one of the strongest brand names and a significant market cap. It’s time to focus on reducing costs, working together as a team, attract new contributors, being genuine, and increasing output.

And on the bright side it is far more decentralized that other leading DeFi protocols.

[dmitriywoofsoftware]

Compound V4 Draft Vision by WOOF!

Acknowledgments

Thanks to Platonia for their insights and analysis of other protocols, as well as their thoughtful suggestions. Their work was insightful and valuable, and I personally would love to collaborate with Platonia, as their analytics can help improve both the current and future versions of the protocol.

Thanks to @cmrn for his insights and efforts in initiating discussions about the future vision of the protocol.

Thanks to @cylon for consolidating potential strategic directions for the protocol and DAO.

Thanks to all contributors, including Gauntlet, AlphaGrowth, DoDAO & Robin, allthecollors, and many others I may not have mentioned, for their valuable discussions.

Introduction

Over the past few years, I have had the opportunity to explore various money market protocols, which has given me a deep appreciation for what Compound and Compound Labs have contributed to DeFi—particularly innovations like Governor Bravo and liquidity mining. However, with Compound Labs stepping away from active protocol development, the community has taken on the responsibility of driving initiatives. This shift has led to a slowdown in the introduction of fundamental innovations.

Since 2021-2022, the lending landscape has evolved with new narratives, such as curated markets (e.g., Morpho and Euler) and improved liquidity efficiency (e.g., Fluid).

One of my key concerns is why isolated markets were chosen for V3. While this approach enhances borrower safety, it also introduces liquidity inefficiencies compared to cross-margin markets. This raises the question of whether deprecating V2 was the right decision. I believe both V2 and V3 could coexist, serving different types of users.

Why Morpho or Euler?

Curated markets have significant potential because they allow for quick and efficient bootstrapping of new markets or vaults while enabling customized parameters. Speed is a key advantage of these protocols, as they avoid lengthy integration and governance processes, unlike Compound. Additionally, these protocols provide reusable infrastructure, which simplifies market deployment.

When designing a new version of the protocol, we should consider:

• How quickly we can launch a new market or vault—can we outpace Morpho or Euler?
• Whether we can limit governance involvement to only the most critical proposals while reducing friction in market creation.

Why Fluid?

Fluid focuses on liquidity efficiency by integrating money markets with decentralized exchanges (DEXs), making it more capital-efficient than traditional protocols. As we develop the new version, we should prioritize liquidity efficiency to enhance the protocol’s competitiveness.

Liquidity Mining

Compound pioneered liquidity mining to drive growth, a strategy widely adopted by other protocols to attract users with higher APRs. However, I believe Compound should move away from this model.

Without the recent reduction in incentives, Compound would have spent $10M annually on rewards. If this had continued, the treasury would have been depleted within five years. This calculation does not account for vendor payments or the continued decline in the price of COMP.

Newer protocols have shorter life cycles and more tokens to allocate for incentives. However, if Compound V4 adopts a more liquidity-efficient model, it may reduce or eliminate the need for additional incentives.

Possible solutions:

• Delegating incentives to the blockchains where the protocol is deployed or to specific collaterals.
• Reducing the continuous selling pressure on COMP would be beneficial for the protocol.

Speed

As mentioned earlier, speed should be a core focus of development—whether in launching new markets, integrating chains, or implementing protocol upgrades.

Institutional Adoption

Compound V4 should explore partnerships with institutional players, as large-scale investors can provide significant liquidity. While securing institutional deals is challenging, successful integrations with entities like Coinbase or BlackRock could enhance confidence in the protocol’s long-term growth.

We need to determine:

• What would make institutions more likely to integrate with Compound?
• What critical features or guarantees must the protocol provide?

Liquidations

The issue of liquidations has been discussed extensively in the community. During the last market crash, liquidators earned approximately $6M, while neither the protocol nor users benefited. MEV builders and liquidators extracted significant value from users.

Key areas for improvement:

• Reducing liquidation fees to enhance user-friendliness.
• Updating or redesigning the liquidation mechanism to allow for soft or partial liquidations opens the door for more aggressive collateral factors.

Long-Term Holder Benefits

Introducing benefits for lenders and borrowers based on the duration of their positions. Users who maintain long-term positions could receive advantages such as better interest rates or lower liquidation penalties. While the exact mechanics are still unclear, this idea could be worth exploring.

Health Factor Adjustments

Currently, supply caps limit borrowing capacity. A user with excessive collateral but a minimal borrow balance can create an artificially high health factor, preventing riskier users from accessing liquidity. A potential solution is to introduce weighted disadvantages for users with excessively high health factors.

Interest Curve

I would like to pay attention to improving the curve mechanisms. The benefit will be to have adaptive and flexible curves for different market conditions to provide the most comparative options in bear and bull scenarios.

Compound V2 and V3 Liquidity

A major challenge is managing liquidity across existing versions of Compound. Over the years, the protocol has attracted significant liquidity, and we must consider how to transition or integrate these assets into V4.

Options include:

• Maintaining V2 and V3 while shifting focus to V4.
• Deprecating older versions and creating migration mechanisms.
• Designing V4 to integrate elements of both V2 and V3.

Cross-Chain Compatibility

There is growing momentum to unify EVM chains, driven by Arbitrum and Across. Inspired by this trend, I believe Compound should prioritize cross-chain functionality to abstract network differences for users.

Rewards

Protocols like Velo and Aerodrome have innovative models for fee claiming, bribes, and governance incentives. We should explore a similar approach as bribes, allowing:

• Arbitrum to incentivize specific markets.
• EtherFi to allocate incentives for weETH.
• Individuals to fund liquidity incentives for specific assets/markets.

This approach delegates the responsibility for reward distribution from the protocol directly to the partners.

Price Feeds

Price feeds are critical to protocol security. We should explore enhancements, including CAPO (developed by WOOF!) and other best practices.

COMP Utility

The COMP token’s utility is vital for the protocol. Potential enhancements include:

• Using protocol revenue to buy back COMP and send it to the treasury.
• Possibly implementing a stakedCOMP mechanism to make COMP a yield-bearing asset.
• Combining buybacks and staking to maximize utility.

Legal Considerations

Regulatory compliance is essential. Potential solutions include:

• Registering Compound outside the U.S.
• Exploring a DUNA structure.

This issue must be addressed in the design phase to prevent legal roadblocks from stalling development.

Protocol Revenue

The protocol should be designed for sustainable revenue generation to support initiatives like stakedCOMP, COMP buybacks, and vendor payments. Quarterly reports should track revenue sources and provide optimization recommendations.

ERC-4626 Compliance

Lending (and borrowing) positions should adhere to the ERC-4626 standard, as it enhances interoperability with other DeFi protocols.

UX and Abstraction

The protocol should be designed with high-level abstraction to improve both developer integration and user experience.

Isolated Markets, Curated Markets or Cross-Margin Markets

This is arguably the most critical question shaping the future vision of the protocol. The way we define and position the protocol will determine its direction.

How other protocols approach this:

• AAVE – DAO-curated, cross-margin protocol with optional isolated collaterals.
• Morpho – Permissionless, risk manager-curated, cross-margin protocol with vault abstraction.
• Euler – Permissionless, risk manager-curated, offering both cross-margin and isolated markets.
• Fluid – DAO-curated, cross-margin protocol with optional isolated collaterals.

To determine our path forward, we must conduct thorough research, weigh the pros and cons of each approach, and base our decisions on data. However, one clear trend emerges—every major protocol supports cross-margin markets. Given this, I believe V4 should follow the same principle.

A key strategic decision is market positioning:

• Do we aim for a broad set of markets with diverse collateral assets?
• Or should we focus on 20–30 core assets, reducing the need for extensive curation?

Regardless of the direction, deployment and market management must become significantly faster and more competitive.

A Probable High-level Vision for V4

The protocol could adopt a hybrid structure:

Main Markets – Cross-margin, DAO-curated, and upgradeable focus on top-tiered assets.
Curated Markets – Functioning as infrastructure, immutable, and targeting different types of clients.

This dual approach balances flexibility with stability, ensuring efficient growth while maintaining a competitive edge.

Conclusion

This document does not propose a final solution but highlights key questions that must be addressed for Compound V4. WOOF! is eager to contribute to research and development to help drive Compound’s renaissance. Based on the community’s direction, we will share more of our thoughts and dive deeper into parts of the post in the following replies.

[peersky]

Hello everyone,

I’m new to this forum, so I wanted to briefly introduce myself. For those who don’t know me (and that’s likely everyone except @cylon), I worked at OpenZeppelin, and in 23/24, I was directly involved in securing the Compound protocol. During that time, I gained a deep understanding of Compound’s codebase and its challenges compared to other projects.

For the rest of the post I’ll be advocating for option 3, with a clear pathway to contributors like Alpha Growth, WOOF and others gain governance rights within DAO in autonomous manner.

Over the past year, I’ve been heavily researching security architecture and the game-theoretic aspects of DAO management. From my research, it’s clear that Compound DAO’s underperformance and centralization issues are now widely recognized as a cautionary tale in the DAO space. This isn’t just an internal concern; it’s impacting the broader DAO sector. You can see this reflected in various academic papers, some of which directly reference Compound:

• R. Feichtinger, R. Fritsch, Y. Vonlanthen, and R. Wattenhofer, “The hidden shortcomings of (d)aos – an empirical study of on-chain governance,” arXiv, vol. 12125v2, no. 2302, Feb 2023.

• The Illusion of Democracy— Why Voting in Decentralized Autonomous Organizations Is Doomed to Fail. NYU Law and Economics Research Paper No. 24-13

• Atzori, Marcella, Blockchain Technology and Decentralized Governance: Is the State Still Necessary?

It’s important to acknowledge a fundamental problem Compound DAO faces. As research indicates, and as common sense dictates, an effective autonomous decentralized entity is not achievable through a single token distribution event, nor is it achievable through a capital-based market. You simply get a compounding of power, which is great, but it’s not all that’s needed for an effective organization. It doesn’t automatically lead to the ability to develop and innovate, which is crucial. Once founding developers move on, this is where the challenges arise.

Morpho, Aave, and other protocols face similar issues. Even if their teams are currently in place, they might not be there tomorrow. Hiring external vendors and delegating development can provide some progress, but vendors will never fully replace core contributors. They’ll do what’s requested by the “hiring management,” which cannot simply say “make it great again”.

I agree with @cylon that Compound needs significant development contributions. Having worked directly with Comet repositories, I can attest to the vast room for improvement and the neglected technical debt.
However, the problem is that attracting and retaining top core developers long-term requires offering them real power within the DAO. be seen from a deduction: Why should they work for you if they can make it better thyself?

The challenge, therefore, is to establish a credible promise from the outset that ensures both parties (current holders & potential contributors) will be fairly compensated. This means that those who deliver the best results for the DAO will receive fair recognition in the form of governance power in exchange for more competitive product & increased utility value.

Given these challenges, I’d like to introduce a potential solution my team has developed:

Rankify.it is a platform designed to streamline discussions, recognize contributions, and optimize decision-making within online communities, specifically DAOs. It addresses core issues like:

• Low participation rates.
• Centralization risks.
• Lack of clear leadership and governance.
• Difficulty in capitalizing on open-source development.

Rankify uses game-theoretic alignment, decentralized discourse mechanisms, and AI-assisted collaboration to foster collective intelligence and create a unified user experience.

To illustrate how Rankify could work for Compound DAO:

Consider that we could establish a Compound DAO Fellowship within Rankify, which would represent decentralized discussion on maintaining the best Compound generating lending protocol.

Here’s how it would function:

• Deriving governance from utility: COMP holders could derive COMP Fellow tokens by demonstrating their commitment to thought leadership and active governance participation by using original COMP as base asset.
  • This splits governance & utility COMP might have, like liquidity mining etc.
  • Ensures no fragmentation of responsibility happens in the process.
• Decentralized Discussion: Fellows could create or join threads to discuss Compound improvements in a structured, decentralized manner.
  • Can be general topics, think of this forum board. We tokenize these discussions.
  • Coders can directly discuss & iterate on code solutions for DAO in autonomous manner.
• Merit-Based Ranking: The most successful and insightful members would rise through the ranks based on the value of their contributions, as assessed by the community and the platform’s mechanisms.
• Contributor & Managerial separation: Our system provisions conversion from base asset (COMP) into derived asset (COMP.F.) through holding intermediate assets called Rank Token. This effectively splits active contributors and those stepping out to review contributor work.
  • Contributors: Can stake their Rank Tokens directly for privileged actions.
  • COMP.F. holders: Slower paced DAO governance body, like Compound is today, but filtered with the discourse through Rankify.
  • This separation provisions ability to give Rank Token holders ability to do privileged actions, e.g. merging code to specific branches of github repos, while ensuring that Fellowship DAO can as mediator, who has incentive equilibria to slash dully acting actors, but not doing that too aggressively as it would draw away contributors and hence affect Fellowship capitalization.
• Gradual adoption: Compound DAO would not need to immediately move on governance but could gradually adopt new technology with a few possible strategies that would maintain that critical promise in front of the contributor community.

For Developers it creates a Credible Path to Influence:

• Merit-Based Advancement: By participating in discussions, proposing solutions, and receiving positive feedback, developers signify their expertise and get increasing levels of access and influence within the Compound community.
• Guaranteed Governance Rights: Compound DAO can establish clear guidelines that tie specific governance rights to achieving certain Rank Token levels. This creates a credible promise that developers who dedicate their time and effort will be rewarded with tangible power within the DAO, such as:
  • Gradual Transition of Governance: Compound DAO can begin gradually moving governance functionality to COMP Fellow token holders, starting with specific decision-making powers and expanding over time as the system proves its effectiveness.
  • Clear Milestones: Define clear milestones and criteria that, when met by high-ranking COMP Fellow token holders, trigger the granting of additional governance rights.
  • This creates a credible promise that developers who dedicate their time and effort will be rewarded with tangible power within the DAO, such as voting rights on key proposals, the ability to initiate proposals, or even positions on a core development team.

For Compound DAO it defines trust and aligned Incentives

• Attracting Core Contributors: The ability to incentivize and recognize top contributors would redefine community members into true core contributors of the protocol.
• Delegation to Trusted Experts: COMP holders can delegate their utility-focused COMP tokens to applications and protocols while delegating governance power to developers with high Rank Token scores (via their COMP Fellow tokens).
• Verifiable Competence: Rankify provides a public and auditable record of developer contributions and community feedback. We use state of art cryptography, ZKs and have MPC solutions provisioned. This allows Compound DAO to assess the expertise and reliability of developers before granting them significant responsibilities.
• Dynamic Alignment: The Rank Token system ensures ongoing alignment between developers and the DAO. Developers are incentivized to continue contributing high-quality work in order to maintain or improve their rank, while the DAO benefits from a continuous influx of expertise and innovation.
• Strategic Discussion Shielding: We provision semi-open source model. Participants may get access to discourse based on their Rank within the community. Running high-level discussions semi-privately would shield strategic discussions and initiatives from being front-run by competitors, allowing Compound to develop and execute strategies with greater confidence.
• Pioneering the DAO path: Partnering with Rankify would establish Compound as a leader in the space and generate significant marketing momentum

In summary, Rankify fosters a system of credible trust by:

• Providing developers with a clear and achievable path to earning real power within the Compound DAO.
• Giving Compound DAO the tools to identify, empower, and oversee competent and committed contributors.

This creates a mutually beneficial ecosystem where developers are incentivized to contribute their best work, and Compound DAO can confidently build a strong and effective core development team.

Currently, Rankify is in its early beta stage and available on Arbitrum Sepolia. We are actively seeking partners to help us refine and scale the platform to production readiness.

To that end, we would be open to establishing a strategic partnership with Compound DAO. This could involve Compound DAO holding a significant amount of Rankify. In exchange, we would seek Compound’s support and collaboration to further develop and optimize Rankify, specifically tailored to meet the needs of large-scale DAOs like Compound.

I believe this is a mutually beneficial opportunity to address Compound DAO’s challenges while advancing the development of a cutting-edge governance and collaboration solution.

I’m eager to discuss this further, answer any questions and if perceived well, create more detailed post outlining proposal draft.