The Bridge between MakerDAO and Compound.

Samyak Jain
Jun 10 · 3 min read

Decentralized Bridge between DeFi protocols

Borrowing is the heart of the banking industry for decades and it’s just started on blockchain about a year ago. Still, a long way to go. We will see a good surge of protocols supporting crypto-backed borrowings in the coming years. Starting with making a bridge between MakerDAO and Compound, our aim is to create efficiency in the whole DeFi industry.

How does it work under the hood?

  1. User will call a function on their smart contract wallet.
  2. Contract wallet will transfer the ownership of CDP to bridge contract.
  3. “Bridging Contract” will pay the debt for the CDP. (Bridge contract will always have around 100K DAI balance to cover user’s debt)
  4. Bridge contract will take out the ETH collateral from Maker’s contract and lend them up in compound’s contract. (contract will receive CETH tokens)
  5. Bridge contract will transfer CETH to user’s contract wallet.
  6. Contract wallet will take equivalent DAI debt from the compound and send it to Bridge contract.

What are the benefits it’s providing to the whole DeFi ecosystem?

  1. For users — Best rates on lending, borrowing and margin trading.
  2. For Maker — Solves the DAI peg problem.
  3. For Compound — Great use case and shows how it’s helping to keep DeFi stable.

InstaDApp

Decentralized Banking.

Samyak Jain

Written by

Co-founder InstaDApp, MakerScan Alerts and Buidling Easwap. ETHSF and ETHINDIA finalists

InstaDApp

InstaDApp

Decentralized Banking.