COMP Rewards Adjustments - Kickstart Rewards: Step One
01Summary
COMP Rewards Adjustments proposal to cut existing COMP rewards by 50%, marking the first step toward ending the current rewards program and launching a new 'kickstart rewards' program focused on growing new markets rather than sustaining COMP farming behavior.
- Type
- parameter change
Key changes
- COMP reward speeds reduced by 50% across 10 markets via _setCompSpeeds function call(high)
- Shift from current COMP distribution rewards program to new kickstart rewards program focused on market growth(high)
- End COMP farming behavior by reducing instant token selling through reduced incentives(high)
Notable concerns
- Current rewards program rewards COMP farming for profit rather than protocol value creation
- Existing token holders experience dilution as distributed COMP is immediately sold off
- This is only the first step of a broader rewards program transition
Generated by Kvorum
02Description
COMP Rewards Adjustments - Kickstart Rewards: Step One
The initial objective of the COMP rewards program was to distribute the token to our users. While this was an effective way to kickstart Compound and reward early users, the practice of COMP farming for profit has become very problematic.
Since most COMP being distributed by the current rewards program is instantly sold off, existing users and token holders are at a great disservice. Their share of the protocol is being diluted for nothing other than farming COMP for profit. This COMP farming behavior is not the kind of activity that will bring value to the protocol, or for the existing users and token holders. Incentives need to be used to grow the protocol to the benefit of the protocol itself and its users and token holders.
Going forward, I believe it’s best to end the current COMP rewards program and to start a new one with the sole purpose of kickstarting new markets: kickstart rewards.
This proposal is the first step towards launching the new rewards program - existing rewards are being cut by 50%.
For more information and discussion, please visit the discussion thread on the forums.
03Mismatch analysis
The single decoded action is a call to _setCompSpeeds across 10 cToken markets, which is the expected mechanism for adjusting COMP distribution speeds — this aligns with the proposal's stated goal of cutting existing COMP rewards as a first step toward a new incentive program. The description's core claim (reducing distribution) matches the nature of the action. However, verifying the precise '50% cut' figure requires comparing against the previous on-chain speed values, which are not included in the provided data, so exact quantification cannot be fully confirmed — this lowers confidence to medium rather than high. Additionally, one market (last in the list) has its borrow speed set to 0 while retaining a non-zero supply speed, an asymmetric adjustment that isn't explicitly called out in the description's uniform '50% cut' framing. This is a minor nuance rather than a material issue, since it still falls within the general theme of reducing rewards and does not redirect funds, change control, or introduce unrelated actions. No omitted transfers, role changes, or target mismatches were found. Overall the proposal's description and calldata are consistent, with only a minor phrasing nuance worth flagging.
Discrepancies
- lowmisleading phrasing
The description frames the change as a uniform 50% cut to existing COMP rewards, but the calldata cannot be verified against prior speed values within this proposal alone, and one market (index 9) shows an asymmetric change where the borrow speed is set to 0 while the supply speed remains non-zero, deviating from the simple 'cut by half' narrative.
“existing rewards are being cut by 50%”
Generated by Kvorum
04Actions
- Target
- 0x3d98…cd3b
- Value
- 0 wei
- Function
- _setCompSpeeds(address[],uint256[],uint256[])
- Arguments
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05Tally
Summed from votes
06Voters
No votes recorded yet.
07Forum
- COMP Reward Adjustments v2 ↗discourse · high confidence
Arguments for
- Current COMP rewards are overwhelmingly farmed and immediately sold, diluting loyal holders without benefiting the protocol, so the program should be ended.— TylerEther, ClairvoyantLabs, simpsi23, ManoWar, RobW
- Liquidity mining is economically unprofitable for tokenholders since acquisition cost of unsticky liquidity exceeds its lifetime value, so ending blanket subsidies benefits tokenholders and reduces inflation.— GFXlabs, sukernik, EricComp
- Peer protocols like Aave are ending similar liquidity mining programs, suggesting Compound should follow suit to stay competitive and avoid falling behind on capital efficiency.— GFXlabs, ClairvoyantLabs, devenmatthews
- Ending indiscriminate rewards is a forcing function to focus resources on more valuable initiatives like Compound III and better-targeted incentive design.— 0x7751, TylerEther
- Data from the initial 50% cut showed minimal negative impact on TVL, utilization, and rates, indicating the market can absorb further reductions safely.— TylerEther, EricComp, GFXlabs
- The plan is not a full end to COMP incentives but a transition to more targeted 'kickstart rewards' that bootstrap new markets more efficiently than blanket distribution.— TylerEther, GFXlabs, 0x7751
Arguments against
- It is too soon after the first 50% cut to have enough data to justify a further drastic change; more time and analysis are needed before acting.— hayesgm, Sirokko, monet-supply, franklin-pantera, jared
- Ending COMP distribution undermines decentralization of governance and ownership, which should remain governance's primary objective, without a clear replacement plan for distributing tokens broadly.— hayesgm, allthecolors, madhavvats
- Cutting rewards abruptly to zero is far riskier and more asymmetric than a gradual, measured reduction, risking sudden liquidity flight that may be hard to reverse.— allthecolors, twoodward, monet-supply, franklin-pantera, dvf
- Abrupt, unpredictable changes threaten Compound's reputation as stable base-layer infrastructure and risk driving away integrating protocols and their liquidity.— twoodward
- Community consultation on this significant change has been insufficient, with too few voices and too little discussion for a decision of this magnitude.— hayesgm, ClairvoyantLabs
- A more targeted, asset-specific reduction (e.g., cutting non-core or non-stablecoin incentives more aggressively while preserving others) would be safer than a blanket removal.— monet-supply
- The replacement 'kickstart rewards' program lacked concrete numbers and details at the time of the vote, making it premature to dismantle the existing system first.— Sirokko, monet-supply, franklin-pantera
Unresolved concerns
- Whether the reserve factor should be reduced in tandem with COMP reward cuts to offset the capital efficiency loss to depositors was raised but never addressed.— psykeeper, coburncoburn
- How sticky new 'kickstart' liquidity will be once its fixed 3-month incentive period ends remains uncertain and hard to generalize from other protocols' experience.— allthecolors, TylerEther, 0x7751
- Whether COMP locked as collateral (cCOMP) should carry voting rights, potentially affecting the outcome of close votes like this one, was raised without resolution.— EricComp
- The idea of using protocol reserves for protocol-owned liquidity or a treasury of non-native reserve assets was floated favorably but never developed into a concrete plan.— Sirokko, TylerEther, Ruslan0990
- Coordinating reward reductions with other protocols like Aave was suggested but flagged as potentially illegal (antitrust/price-fixing) and left unresolved.— monet-supply, dvf
Notable participants
- TylerEtherProposer who authored the phased rewards cut and kickstart rewards plan, submitted on-chain proposals, and responded extensively to community feedback.
- hayesgmCore contributor who raised process and decentralization concerns and urged tabling the proposal for more community input.
- allthecolorsVoted against, emphasized decentralization value of pro rata distribution and asymmetry of abrupt cuts, later engaged constructively on kickstart mechanics.
- twoodwardNotional Finance co-founder representing an integrating protocol's perspective, voiced strong opposition citing reliability and competitive risk.
- GFXlabsContributor who voted in favor with data-driven analysis supporting ending blanket COMP subsidies.
- monet-supplyVoted against, proposed a detailed targeted/asset-specific reduction alternative and highlighted asymmetric liquidity acquisition costs.
- franklin-panteraVoted no on behalf of Pantera Capital, arguing the proposal was directionally right but poorly sequenced and timed.
- madhavvatsVoted against on behalf of ChicagoDAO/a16z delegation, citing lack of replacement mechanism and decentralization risks.
- sukernikProvided a stakeholder-incentive analysis framing the debate among users, tokenholders, core team, and contributors.
- SirokkoFrequent skeptical voice challenging the dilution narrative, decentralization claims, and rush to cut rewards before presenting a new model.
Generated by Kvorum
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