The controversy over the Venus-induced voting proposal: Is it a protective agreement or a monopoly on governance rights?

Author: Chain Catcher

Yesterday, a governance proposal in the Venus community of the BSC lending protocol, which involved inducement voting behavior, was "one-click canceled" by the official Venus community address after receiving a majority vote. This is one of the rare cases in the DeFi industry where an on-chain governance proposal or vote has passed but not been implemented.

The official Venus team later responded that this action was intended to prevent anonymous individuals from controlling the protocol, but many community members questioned its "centralized" governance.

Previously, a proposal titled "Forming the Bravo Team" was put forward in the Venus mainnet, which aimed to grant a team named "Bravo" voting and fundraising capabilities equal to those of the original governance team, along with a financing plan. The proposer claimed that the goal of the Bravo team was to maintain and boost the price of the Venus token XVS.

However, the proposer allegedly induced voting by promising token distribution. According to the proposal description, out of the proposed financing of 1.9 million XVS tokens, the Bravo team would allocate 900,000 XVS (29 million USD) to addresses that voted in favor. Ultimately, on September 14 at 10:33 PM, the proposal passed with 1.29 million votes in favor and 1.19 million votes against.

On September 17, the proposal was canceled by an address labeled "Venus: Deployer." In the early hours of the next day, the Venus team released a blog response stating that "the attacker attempted to control the protocol through bribery," and the team had implemented a measure called "Governance Guardian" to halt the motion.

The Venus team stated that Governance Guardian is a security measure activated only in emergencies and had previously been used in the Compound community. The blog acknowledged that the current governance of the Venus community is not ideal, with a "high risk of being hijacked by hostile whales," and promised to propose a better DAO. However, the team also stated that they would continue to use Governance Guardian as a protective measure.

After the response was published, some community members praised the action while noting that decentralization has its limitations. However, more community members criticized the team for violating the principles of DAO, calling it cheating, and stated, "It's time to sell all XVS."

Compound founder Robert Leshner characterized the aforementioned proposal as a "hostile takeover event," but also questioned the Venus team's unilateral power to cancel an already approved proposal.

In May of this year, Venus experienced a significant liquidation event, leading to a crisis of trust for the team. On May 19, Venus was maliciously manipulated by a whale address, which deposited nearly 2 million XVS at a high point and borrowed over 100 million USD worth of BTC, ETH, and other assets. Subsequently, as the price of XVS rapidly fell, it triggered large-scale liquidations. Due to insufficient market liquidity for XVS, the system failed to liquidate in time, resulting in a loss of nearly 100 million USD for the Venus platform, while many depositors of BTC and ETH were unable to withdraw their assets smoothly.

Afterward, users questioned the potential wrongdoing of the Venus/Swipe team by analyzing on-chain transaction addresses, raising concerns. Ultimately, regarding this incident, Venus announced that the Swipe team would no longer participate in project management, and the old team and management would be restructured.