Compound DAO
This research is centered on Compound DAO. One of the vying decentralized finance protocol mankind has ever witnessed. In this research, we'd learn about the DAO tools used by Compound DAO and how the tools are used in their governance process. We'll also discuss about the Compound DAO utility token and how users can get the token.
What is Compound?
Compound is a decentralized finance, Ethereum-based project that allow borrowers to take out loans and lenders to provide loans via locking of assets into the protocol. The protocol was built to harness fast, efficient, and decentralized financial system for peer-to-peer lending.
How Compound DAO Does Their Governance
Compound DAO has an utility token known as "COMP." The COMP token is used to govern the platform and it also serve as a medium of reward for users using its lending and borrowing services. A COMP holder can participate in decision making process for the DAO, and prolosals. COMP holders can also assign their voting rights to another user to vote on their behalf.
Compound DAO Governance Process
The Compound protocol is governed and upgraded by COMP token holders using three distinct components:
The COMP Token
Holding the governance token is pivotal if you want to participate in governance. As a COMP token holder, you can delegate voting right to yourself or any addresses of your choice. Before any DAO member can create governance proposals, he must have at least 25,000 COMP token delegated to his address. Additionally, any address can create an Autonomous proposal by locking 100 COMP token, it would become a governance proposal after being delegated 25,000 COMP.
Governance Module/Governance Bravo
This is the second step towards creating a Compound governance proposal. The governance module allows addresses that have amasssed 25,000 COMP to propose changes to Compound protocol. The proposal needs at least 400,000 vote cast before it is queued in the Timelock and can be implemented after 2 days. Tally is one of tools used for the on-chain voting and delegation process.
Timelock
This is the last stage of the Compound governance process. Each protocol contract is controlled by the Timelock contract. Timelock contract is responsible for queuing and executing all proposals that have reached the governance vote. OpenZeppelin plays a paramount role. Smart contracts are written by humans, and humans makes mistake in both coding and relationship. Smart contracts can be compromised via loophole in codes. OpenZeppelin provides security and audits the Compound protocol for safe voting process.
DAO tools used by Compound DAO
When it comes to the treasury side of things, Parcel is DAO tool you should be on the lookout for. Parcel is a treasury management and compensation tool designed to help manage the outflows of funds within a DAO. Parcel has worked with over 200+ DAOs (as of December 2021) including Compound Grants. Parcel helps DAOs to alleviate the manual disbursement process within their community.
OpenZeppelin exists to be an open-source framework for building secure smart contracts. Software developers and organizations (especially decentralized ones) uses OpenZeppelin because it provides a complete suite of security products and audit services.
Get started with OpenZeppelin (Video)
Boardroom is another promising governance portal for DAOs. With Boardroom's framework, DAOs can perform standardized operations like voting, delegationg, and participate fully in governance processes with their community.
Boardroom workshop (Video)
Tally is a cutting-edge voting and governance analysis tool that allows DAOs to vote on active on-chain proposals, delegate votes to third party, and also view previous proposals. Tally allows users to see who an individual voted for, the percentage of voting rights; whether a user voted for or against, or abstained for a proposal - this enhances transparency in the voting process.
Compound DAO onboarding
Simply follow this link to join their Discord; read and agree to the compound server rules, click complete. You've been onboarded!
Any user looking to get the COMP token can purchase it on DEX exchange platforms. More so, Compound platform also reward users with extra token when they interact with the Compound market by (borrowing, withdrawing or repaying the asset).
Last updated