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Compound Governance

The purpose of Compound is to build a financial system that app and builders can depend on indefinitely.

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The purpose of Compound is to build a financial system that app and builders can depend on indefinitely.

The Compound protocol’s architects plan to completely decentralize it. In addition, they will eliminate the group’s sole point of error. Build an unbreakable, open protocol that can expand in new and unexpected ways.


The government performance will be replacing the Compound protocol’s administration. Thanks to the creators’ efforts. Moreover, users will be able to propose, discuss, and adopt modifications to Compound without relying on the team.

In addition to becoming a regular ERC-20 asset, COMP permits the holder to assign voting power to any address they like. It will include their wallet, an application, or a DeFi specialist. Without owning COMP, anyone can engage in Compound governance by getting authority. One will be putting a specific code on a token. They will be using it to retrieve an address’s history voting weight. It will be very useful when they will be creating complicated voting machines.

The group will design an Ethereum Improvement Plan, akin to the ERC-20 pattern. This is to advance decentralization for the whole community. It has the hope that COMP can establish the criterion for how administration tokens function.

COMP is a tool for community governance, not a funding or investment vehicle.  Furthermore, COMP will not be available to the general population until the decentralization phase is completed.

Community, not centralized, decisions

They’ve created a basic governance structure so that anyone may quickly contribute to Compound’s direction. Anyone with 1% of COMP assigned to their location can suggest a governance action.

These processes could be easy or complicated. It will include adding assistance for a new asset and shifting an asset’s collateral element. They will also be adjusting a market’s interest rate framework, modifying criteria or variables of the procedure that the existing administrator can change.

Plans are actionable code. Hence, a committee or organization will not be implementing the plans. There should be a three-day voting session for every proposal. Any address with voting power can decide for or oppose it.

They will be processing the proposals in the Timelock if it will receive 400,000 votes. They will be executing the process in just two days. People can also vote to change the governance mechanisms with a new one if they don’t like something.

Decentralization Process

Someone will be guiding the movement towards the community administration. This is by the notion of greater decentralization and a constant emphasis on stability and safety.

The process will disperse a subset of the governance tokens. Subsequently, they will be giving it to every company’s stakeholders during an introductory sandbox phase. Moreover, they will be able to assign voting weight to themselves. The remainder of COMP will be escrowed and will not engage in governance.

Developers will be urging Compound users to take an active role in governance. Nevertheless, they will be putting this on trial in public. The group will be able to disable the governance process during the sandbox as a failsafe.

It’ll be advised that the failsafe be withdrawn. Finally, the remaining tokens are given to Compound protocol participants once the governance mechanism has proven to be stable and allocated.

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Peter Gonzalez is an experienced writer focusing on cryptocurrencies and other financial topics with a passion for personal finance. Peter enjoys Sports cars and travelling.