The Compound team announced a new governance structure that is community based. This new structure replaced the original Compound administrative protocol. The essence of the new regime is to enhance decentralization of the network.
A statement released by the co-founder and CEO of the blockchain network, Robert Leshner said that the new structure would allow community members on the Compound network to make suggestions, raise debates and implement changes in the compound network.
In a Medium post released on February 26, the team stated that participation starts with the Compound governance token, COMP. The ERC20 token gives the owner the ability to delegate voting rights to addresses of their choice.
It further stated that:
“Anybody can participate in Compound governance by receiving delegation, without needing to own COMP. The token also includes code to query an address’ historical voting weight, which is useful for building complex voting systems.”
The statement also stated that the team’s vision is to build a truly decentralized ecosystem with an effective governance structure that would set a standard in the cryptocurrency and blockchain ecosystem.
It highlighted that COMP is not an investment instrument at the moment. This is the reason why it will not be available to the public until the full decentralization of the Compound network.
The way the governance structure works is that any holder of 1% of COMP has the ability to initiate a proposal on the network. According to Leshner,
“These are simple or complex sets of actions, such as adding support for a new asset, changing an asset’s collateral factor, changing a market’s interest rate model, or changing any other parameter or variable of the protocol”
The new Compound governance has been audited by OpenZeppelin. The security audit has also been carried out and the result will be made public soon. All these are geared towards decentralization of the platform without compromising stability and security.
Developers building on the Compound platform have been encouraged to participate in governance and add their voices, visions and initiative to the overall direction of the project in the course of decentralization. The release added that:
1/ 📣 Compound just announced details about its new governance structure— DeFi Pulse 🍇 (@defipulse) February 26, 2020
– new gov token called COMP can delegate voting power
– Users w/ +1% of COMP delegated can create proposals (which are executable code)
– (pic below) proposals follow path below with min 4% quorum https://t.co/bdC57vbPui pic.twitter.com/2GEwzsi5nN
“As a failsafe, our team will have the ability to suspend the governance system (though not the protocol’s 2-day timelock) during the sandbox.”
Compound aims to create financial infrastructure that applications and developers can confidently build on and depend upon.