DeFi governance pressure intensifies, Compound delays treasury vote and limits veto power

Compound COMP holders are voting on Proposition 612

Compound agreement COMP holders are voting on Proposition 612. The proposal aims to extend the treasury withdrawal delay from two days to ten days and give the Governor Timelock the power to cancel treasury transactions before transactions are executed. According to the proposal page, voting opens on Sunday and will close on Wednesday (October 7).

Although these changes may seem technical in nature, the main concern is actually who will control Compound's treasury. The vote also raises a larger question in the DeFi space: To what extent will protection mechanisms begin to show signs of centralization when adding control to the protocol?

Specific changes to Proposition 612

Proposal 612, submitted on behalf of Ugur Mersin on October 2, increases the Treasury Escrow withdrawal cooldown period and the minimum delay time for the Treasury Time Lock from 2 days to 10 days. In addition, the proposal establishes a 17-day escrow expiration period, which means there is a seven-day withdrawal window after the cooling-off period.

The proposal states that two of the five operations would grant governance time locks the "executor role"(EXECUTOR_ROLE) and the "canceller role"(CANCELLER_ROLE) associated with treasury time locks. This means that governance agencies can not only react after the fact, but also prevent the treasury from performing any operations.

According to the latest voting statistics, the number of votes in support of the proposal was 1.75 million and the number of votes against it was 921,000, far exceeding the quorum requirement of 400,000 votes.

The reserve change that triggered the vote

The proposal mentions Compound Treasury's actions on September 29. The Treasury Board transferred approximately $3 million of stablecoins to a separate Safe account, which then used $2 million of USDC to build a one-way Uniswap V3 COMP position. Proposition 612 supporters claim the incident demonstrates the need for enforceable suspension mechanisms in governance, not just voluntary requests.

In fact, the conflict existed before the action took place. Cryptopolitan reported that representatives accused the Compound Foundation of converting 8.42 million DAIs stored in the DAO reserve into 344,780 COMP. The representative also claimed that the resulting voting rights were used to influence treasury control and a $52 million V4 plan. COMP was subsequently allegedly transferred back to its Safe account 58 minutes before the voting deadline for Propositions 580 and 582.

Compound Proposition 612 vote highlights treasury control and DeFi governance risks

Beyond Compound's dilemma

Stronger controls may provide peace of mind to users and organizations. Compound has approved a $52 million development budget to further penetrate the institutional market. However, clearer powers to intervene also raise a cliché question in the DeFi space: Who really has control? A 2025 ACM study found that governance issues are prevalent in DeFi projects, while Galaxy Research emphasized that governance failures can lead to losses and forced liquidations.

Regulators are also focusing on the same fault lines. Chainalysis's summary of the FATF framework noted that authorities are reviewing whether anyone exercises "control or sufficient influence," including through centralization of governance and treasury control to achieve this.

Background of shrinking DeFi lending

Compound made these changes against the backdrop of a weak lending market. Galaxy found that as of the second quarter of 2026, total loans from DeFi lending apps fell 27.61% to US$20.43 billion; while overall crypto mortgage lending fell 16.78% to US$56.16 billion.

So Proposition 612 is not just a fine-tuning of the treasury. It is a test to see if DeFi can make governance more enforceable without weakening the decentralization it is designed to protect.

If you are reading this article, you are one step ahead. Please continue to stay ahead through our newsletter.