Concern About Proposal 513: Circular Incentives, Treasury Drain, and Unnecessary Multisig Costs
I’d like to raise a few concerns regarding Proposal 513 and the broader pattern it reflects:
1. Circular incentives: proposing actions that later require self-reimbursement
The Foundation is submitting proposals (e.g., 504 and 510) and then funding their execution from its own COMP — only to request large reimbursements from the DAO afterward.
This creates a loop where the proposer effectively determines both the action and the payout, with the DAO treasury absorbing the cost.
2. Chronic COMP shortages are not a justification for draining the treasury
The explanation that the Comptroller “did not have enough COMP” is concerning.
If treasury and Comptroller balances have been allowed to deplete due to ongoing emissions and claims, this is a governance and resource-management failure, not a valid reason to remove >$1M from DAO reserves.
3. Multisig renewals and governance processes should not impose recurring operational costs on the DAO
Proposal 510 (multisig renewal) demonstrates a pattern where internal operational structures create new financial obligations for the DAO.
If the multisig governance design requires COMP transfers that the DAO cannot cover, then the process is fundamentally inefficient.
A multisig should not produce additional costs or require emergency COMP replenishment each cycle.
4. No buybacks, rising token supply, and a shrinking treasury is an unhealthy long-term model
With no COMP buyback mechanism, increasing token circulation, and repeated treasury outflows, the economic structure is trending negatively for tokenholders.
Reimbursements of this scale accelerate that trend.
Summary
The DAO should not be in a position where:
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proposers design processes that require COMP they later demand reimbursement for,
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multisig or governance cycles impose new treasury costs, and
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treasury outflows are justified by structural issues that should instead be fixed.
Before approving this reimbursement, we need clarity on how these systemic issues will be prevented going forward.
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Appreciate your comments @AzadArdalan , and I don’t think anyone would disagree with the spirit of them. Contrary to your post, the Foundation proposed neither 504 nor 510, and it did not post 513 either. As I explain below, there is strong evidence here that the Foundation is acting in the best interest of the DAO through the events that took place and that inaction would have been a materially worse outcome regarding the safety of the DAO’s resources.
The intent of Proposal 504 is to activate the DAO’s remaining COMP in governance while it remains under DAO control. This is sensible insofar as (1) we know that COMP distributed to protocol users, more often than not, never gets delegated or used in governance; (2) as you noted, the DAO commands a significant treasury. This treasury is susceptible to governance attack, so more COMP delegated to delegates with a track record of acting in the DAO’s interests is a good thing.
What happened here was a clever use of a technicality in how the Comptroller distributes COMP rewards to push accrued COMP to users in a probable attempt to cause these proposals to fail at a technical level despite passing governance. The Comptroller allows anyone to spend gas to push users’ accured COMP rewards to their wallet. An actor deployed a custom contract and pushed enough COMP rewards out to claimants to reduce available COMP for delegation in the Comptroller below the threshold in Proposal 504. Such action appears intended to undermine governance and should rightly be viewed as a soft attack on governance.
How the DAO will approach funding future service provider agreements with the near depletion of the historical stash of COMP in the Comptroller is a valid question, but that is for governance to determine and not a reason to deny the Foundation the COMP it effectively lent the DAO interest-free to ensure smooth passage of DAO-approved proposals.
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Thank you for taking the time to review my previous comment and for providing a clear and comprehensive response. I appreciate your engagement and the transparency you brought to the discussion.
In light of the issues outlined, I would like to raise a question regarding potential long-term mechanisms the DAO might consider. Specifically, would it be appropriate to explore a governance proposal introducing a structured COMP buyback framework—funded through a predefined budget and executed in recurring intervals—to address the depletion of reward reserves while simultaneously strengthening token utility and overall economic alignment within the protocol? Such a mechanism could help stabilize incentive flows and reinforce the governance power backing the DAO.
Additionally, the absence of a staking or locked-stake mechanism for COMP, especially one designed to incentivize non-voting holders or to introduce alternative forms of utility, stands in contrast to practices widely implemented across comparable DeFi governance systems. Given this discrepancy, I am trying to understand why similar approaches have not been prioritized or broadly discussed by the community at this stage.
I would be grateful to hear your perspective on whether these mechanisms—or variations of them—could offer sustainable reinforcement for governance participation, treasury resilience, and long-term protocol incentives.
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