Compound Foundation Reimbursement

Summary: 

This proposal seeks authorization for the transfer of USDC from the Compound DAO Treasury to the Compound Foundation at 0x27944bC193AF572136b0f370Ca738514D52f7c80, reimbursing the Foundation for COMP that it fronted to enable the successful execution of governance proposal 504, and soon, proposal 510.

The reimbursement will be made in USDC rather than COMP due to the current unavailability of adequate COMP balances within DAO-controlled contracts, including the treasury and Comptroller.

Proposal Details: 

In order to ensure timely execution of proposals 504 and 510, the Compound Foundation temporarily provided/will provide 30.5k COMP from its budget. These COMP tokens were required to be sent to the Comptroller contract to satisfy onchain requirements for governance execution.

• 24,000 COMP has already been delivered to the Comptroller.
• 6,500 COMP remains to be transferred as part of the finalized workflow and will be completed before this present proposal’s voting period goes live.
• Total COMP fronted by the Foundation: 30,500 COMP.

The Foundation provided these tokens on a short-term basis with the understanding that the DAO would reimburse the value of the COMP. A timely reimbursement of the fronted assets is now required to ensure no disruptions in Foundation operations. Importantly, this transfer of funds does not provide the Foundation with additional funding. It is purely a reimbursement. 

At present, DAO treasury and Comptroller balances do not contain sufficient COMP to reimburse in kind. So, the most appropriate reimbursement mechanism is a USDC transfer equal to the economic value of the COMP provided. The Foundation will then buy back COMP using the USDC.

Below are the specific pricing details:

• Proposal 504: 24,000 COMP valued at $31.91, totaling $765,840
• Proposal 510: 6,500 COMP valued at $35.54, totaling $231,010

Because the Foundation advanced these assets ahead of reimbursement and assumes financing risk, a 10% buffer is applied to the overall USDC reimbursement, equating to $99,685.

Total reimbursement amount: $1,096,535 USDC

Cause for Reimbursement:

The Comptroller contract is responsible for distributing COMP rewards to users across Compound v2 markets. As users claim their accumulated rewards, whether individually or via automated claim processes, the Comptroller’s available COMP balance naturally declines over time. 

Recently, a substantial amount of accumulated COMP rewards was claimed. Since the Comptroller contract is responsible for distributing COMP rewards, these claims reduced the amount of COMP held within the Comptroller. As a result, the Comptroller’s available COMP balance fell below the threshold required to support the execution of proposals 504 and 510, both of which involve COMP transfers as part of their onchain actions.

To ensure these governance proposals are processed without delay, the Compound Foundation temporarily provided/will provide the necessary COMP from its operational budget.