mixPopular decentralized finance (DeFi) Protocol for lending and lending crypto has launched a new “streamlined” version of the protocol called Comet.
The launch follows a successful governance proposal, with the new iteration of the protocol touted as a “game-changing upgrade” for borrowers in the DeFi space.
“Compound III is a streamlined version of the protocol with an emphasis on security, capital efficiency and user experience. The complexity was not added – it was removed. What remains is, in DeFi, the most effective tool for borrowers,” Compound founder Robert Leshner wrote in a blog post.
While the new version of the protocol has many improvements, the biggest change, however, is the introduction of a new lending model that facilitates a single borrowable, interest-earning asset, with all other backed assets acting as collateral. Huh.
In the pooled model of the previous iterations, the posted collateral was mixed with other collateral. For example, if you borrowed USDC against Ethereum, it is possible that your Ethereum could be mixed with assets of other users.
Now, however, users can only withdraw the collateral that they have deposited. “It can never be taken back by other users,” Leshner wrote.
The potential advantage here, as Jared Flatow, VP of engineering at Compound Labs, wrote in the original proposal, is that “since there are different borrowing collateral factors, and liquidation collaterals factor in,” this approach “acquires borrowers quickly.” Prevents liquidation, and can improve risk management.”
decrypt Compound has been reached for more comments, but has yet to hear back by press time.
Compound enhances risk management
First Deployment of Compound v3 Will Let Users Borrow Using USDC Stablecoin Ethereum (ETH), wrapped bitcoin (wBTC), as well as native tokens of Chainlink (LINK), Uniswap (UNI), and Compound (COMP), serve as exclusive price feeds of Chainlink’s oracle protocol.
“While you will no longer earn interest on the collateral, you will be able to borrow more; with less risk of liquidation and lower liquidation penalties; while spending less on gas,” Lesnar wrote.
To further limit risk, Comet introduces market-wide limits on the size of individual collateralized assets, in accordance with the passed ruling resolution.
The new version of the Compound protocol features a redesigned risk management and liquidation engine, which enhances the security of the protocol.
It also offers advanced account management tools for developers—something that enables new applications to be built on top of the protocol.
Compound v3 will also change the protocol’s governance system. Instead of a network of individually managed contracts, the new governance model is done through a single “configurator” contract.
This means in practice that all governance functionality is contained in a single smart contract, making it easy to both code the protocol’s code base and actual participation in governance.
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