Announcing the next generation of interest rate markets
Compound was designed as an experiment — a first of its kind protocol to enable the transparent, frictionless borrowing and lending of Ethereum assets. When we launched the first version of the protocol in September 2018, our team had no idea what to expect, or what we would learn.
Suffice it to say, we’ve been blown away by the response. The Compound protocol has:
- Enabled millions of borrowing, and currently holds ~$24 million of assets
- Empowered developers, including Dai payment use-cases, interest-bearing meta stablecoins, open finance interfaces, and dozens of projects in the works
- Inspired open finance experimentation, debate, competition, and innovation
The future of Compound
We’re proud to announce that our team has spent the past months analyzing, designing, and testing a second version of the Compound protocol, which our team has been referring to as Presidio internally. Our goal is nothing short of complete transformation — a version of Compound that is expansive, community governed, cleaner, and upgradable. Here are a few of the changes we have in store:
- Granular risk modeling — most lending platforms allow you to borrow 66.6% of the value of your collateral (including the original Compound). This forced the protocol to only support large, liquid assets (including Ether, and a few of the top token projects). Now, each asset will have its own collateral factor, so that Compound can support every asset, not just large and liquid ones. That means your favorite, obscure utility token.
- Asset gateways — the original Compound was essentially a single contract. Now, each asset will have its own smart contract gateway, customized to the underlying asset. This will allow Compound to support Ether without “wrapping” it first, ERC-721 token pools, and token standards that haven’t been designed yet.
- Planned Governance improvements — the mechanics for each asset can be upgraded over time. For instance, the ZRX gateway can be upgraded to allow ZRX token-holders to govern ZRX’s interest rate model, borrowing parameters, or price feed. One day, every token might become a Compound governance token.
Compound v2 has been audited by Trail of Bits and Certora, and is currently deployed to the Rinkeby testnet.
Over the coming weeks, we’ll update this section with information on the v2 production deployment, which will run in parallel with the legacy protocol. Once we’ve determined that v2 is operating successfully on mainnet, the legacy protocol will enter stasis with supply and borrow transactions disabled.