Saturday, June 15, 2024

Compound III is Stay. Clear, truthful, autonomous curiosity… | by Robert Leshner | Compound Labs

Clear, truthful, autonomous rate of interest markets for all

Compound launched in September 2018, and was the primary occasion of user-to-protocol (quite than peer-to-peer) collateralized borrowing. The concepts and improvements from this primary model powered the expansion of DeFi that adopted.

In Might 2019, the second model of Compound launched transportable collateral (cTokens), and progressive decentralization that remodeled Compound right into a community-governed protocol, with over $100 Billion of transactions.

In the present day, following a profitable COMP Governance proposal, Compound III is stay.

Compound III is a streamlined model of the protocol, with an emphasis on safety, capital effectivity, and person expertise. Complexity wasn’t added — it was eliminated. What stays is the best instrument for debtors in DeFi.

Essentially the most profound change was to maneuver away from a pooled-risk mannequin, the place customers can borrow any asset. On this mannequin (which Compound pioneered) collateral is continually rehypothecated. A single dangerous asset (or oracle replace) can drain all belongings from the protocol.

As an alternative, every deployment of Compound III encompasses a single borrowable asset. Once you provide collateral, it stays your property. It might probably by no means be withdrawn by different customers (besides throughout liquidation). Capital effectivity will increase too — collateral is extra “helpful” when you recognize which asset is being borrowed forward of time.

The primary deployment of Compound III lets you borrow USDC utilizing ETH, WBTC, LINK, UNI, and COMP as collateral.

When you gained’t earn curiosity on collateral anymore, you’ll have the ability to borrow extra; with much less danger of liquidation and decrease liquidation penalties; whereas spending much less on gasoline.

New Options

  • A completely redesigned danger administration / liquidation engine to extend the security of funds whereas concurrently being extra borrower-friendly.
  • Market-wide limits on the dimensions of particular person collateral belongings to restrict danger.
  • Decoupled earn & borrow rate of interest fashions; governance has full management over financial coverage.
  • Superior account administration instruments, which allow new UX patterns and purposes on prime of the protocol.
  • Chainlink is the unique worth feed, which is transportable to EVM chains past Ethereum.
  • Governance is straightforward & straightforward to handle; the protocol is a monolith, with parameters set by a single Configurator contract.

For particulars and a listing of all adjustments, please see the total documentation.

Safety

Compound III was audited by OpenZeppelin and ChainSecurity, and formally verified in partnership with Certora.

The protocol depends upon new expertise which could include undiscovered vulnerabilities. With the intention to defend customers, the primary market was initialized with modest collateral limits. The group is inspired to look at the protocol earlier than scaling throughout belongings & blockchains.

Launching this next-generation protocol has been a large effort bringing collectively all stakeholders within the Compound ecosystem; thanks to everybody that contributed, reviewed, examined, audited, debated, and voted to carry the protocol to life.

Out of the gate, Compound III is managed & owned by the group:

  • COMP Governance has unique management over the deployed Compound III market and all future deployments.
  • The codebase makes use of a enterprise supply license which COMP Governance can modify & grant utilization to, because it sees match, by making adjustments to compound-community-licenses.eth, an ENS area owned by the group.

You probably have any questions, concepts, or points, be a part of the group in Discord. From all of us at Compound, 📈.

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