Compound Chain is an independent distributed ledger that can transfer value and liquidity between different ledgers. Users can borrow and lend cross-chain assets between different blockchains based on Compound Chain, and can also use any supported The assets are used as collateral to borrow Compound Chain’s native token CASH (similar to MakerDAO’s DAI).
Written by: Karen
The DeFi lending star project Compound issued a governance token COMP in June this year and started lending and mining has been regarded as the “fuse” of the DeFi boom. After six months, the project officially released a new white paper today and announced the Compound Chain plan and will be released The native token CASH.
Compound said that although it pioneered liquidity mining in the DeFi field, it still faces a series of pain points such as high transaction costs, inability to support assets not issued on Ethereum, and aggregating multiple assets while causing risk stacking. Compound Chain hopes to solve these problems by reconstructing an independent distributed ledger, and promote the rapid adoption and growth of digital assets on various new blockchains, including Ethereum 2.0 and central bank digital currency ledger.
At present, the Compound development team has begun to build a testnet, and Compound Chain may be released in the first quarter of 2021.
What is Compound Chain? What are the characteristics?
Simply put, Compound Chain is an independent distributed ledger that can transfer value and liquidity between different ledgers . Users can borrow and lend cross-chain assets among different blockchains based on Compound Chain.
Specifically, users can upload assets on other blockchains to Compound Chain, and transfer assets to any supported blockchain address to lend assets, and can also use any supported asset as collateral to borrow Compound Chain The native token CASH (similar to MakerDAO’s DAI), and can download or redeem assets and CASH to a supported blockchain.
The most important feature of Compound Chain is the ability to create native assets on accessible and integrated blockchains, and it can also support mortgage assets from these blockchains, such as ETH, UNI, DOT, and Diem.
Compound Chain has a contract that can lock and unlock assets on Compound Chain for each supported blockchain . This connection contract is called ” Starport “, and it can also custody a token contract for native assets on Compound Chain. Users “upload” assets to the Compound Chain through Starport. These assets will exist on the contract on the blockchain (such as the Ethereum smart contract) and will be locked until released by the Composite Chain validator node. However, users can download or redeem assets from Compound Chain to the original blockchain at any time if certain conditions are met.
Similar to most open ledgers, the compound chain also uses key pairs (public key and private key) to sign to store and transfer assets. Users will be able to interact with Compound Chain using their key pairs on blockchains such as Ethereum and Solana. In other words, any balance on the Compound Chain can be sent to any other address. For example, an Ethereum address can send Compound Chain ETH to a Tezos address, and a Tezos address can send Compound Chain WBTC to a Solana address.
In terms of asset lending , if an account wants to borrow assets, it must have sufficient mortgage assets on the Compound Chain to repay its debts, but these mortgage assets do not need to be on the same blockchain as the account address, such as an Ethereum address You can use Compound Chain XTZ as collateral.
Compound Chain uses price signatures based on the Open Price Feed to perform liquidity checks on operations that may reduce account collateral or increase its debit balance, or test whether the account can be liquidated. Compound said that the low-cost nature of block verification will allow verifiers to transmit prices to Compound Chain in real time.
The native token CASH is similar to MakerDAO’s DAI
The native token (or accounting unit) of Compound Chain is CASH, which is similar to DAI of MakerDAO . The total amount of CASH held by users and verifiers is always equal to the total amount of CASH debt. Initially, the price of CASH will be set to $1, and then through governance CASH will be able to track alternative indexes, such as a basket of currencies.
The purpose of CASH mainly includes paying transaction fees on the Compound Chain. Users can borrow CASH and pay transaction fees by uploading supported mortgage assets.
All CASH held by users and verifiers can enjoy a continuous compound interest rate of return. If YieldCASH is equal to 3%, users who hold 100,000 CASH will hold 100,008.21 CASH one day later.
Users can download CASH to any supported blockchain. In this way, the value of any asset on any blockchain can play a role in the decentralized financial ecosystem on Ethereum or other blockchains.
Downloading CASH is similar to downloading assets already owned on Starport, but CASH will not withdraw assets (such as ETH) from Starport, but will be minted by the local token contract, and the balance will be credited to the Compound Chain.
In order for the CASH held on any supported blockchain to generate interest on the Compound Chain at the same time, the yield index will often be synchronized with these blockchains.
How to manage and implement functions?
In terms of governance, the Compound governance system on Ethereum has established a distributed decision-making process that can transmit governance behaviors to Ethereum Starport, and then Compound Chain verifiers will receive instructions from it. This means that COMP will still act as a governance token . The initial parameters of governance will include the initial set of validators, supporting assets, supply ceilings, and CASH interest rates.
Compound Chain is run by approved verifiers and is a Byzantine fault-tolerant proof of authorization (PoA) network. At present, Compound has not stated in the white paper what technology will be used to realize this vision of transferring value and liquidity between different ledgers.
