DAOs are forcing crypto protocols to choose between code and emergency brakes

Compound is a crypto lending protocol governed by holders who delegate their COMP tokens, a setup known as a decentralized autonomous organization, or DAO. It works like an online republic, with token holders debating proposals, voting, and letting software carry out the result.In July 2024, that republic nearly sent a fortune to a small group of voters. Proposal 289 asked Compound to transfer 499,000 COMP, then worth about $24 million, into a yield-bearing vehicle they controlled. Two earlier versions had failed, and the third seemed headed the same way.Then, during the final 34 minutes, supporting addresses cast 563,591 votes, equal to 82% of all support for the proposal. The last big block landed eight minutes before the deadline, and the measure passed by 682,191 votes to 633,636.While this was extremely controversial and remains highly contested, there was no issue with the code, as it worked exactly as intended.But that was the problem: the wallets had gathered enough COMP and delegated their voting power before the period closed, but Compound lacked an emergency authority that could pause the software. Several reasonable rules had combined into a convenient path for a treasu...