Decentralized lending platform Compound has launched a new “streamlined” version of its protocol called “Compound III.”
With the update, Compound (COMP), an algorithmic, autonomous interest rate protocol, is moving away from a pooled-risk model where users can borrow any asset, according to a new blog post from Robert Leshner, the founder of Compound Finance.
“In this [pooled-risk] model (which Compound pioneered) collateral is constantly rehypothecated. A single bad asset (or oracle update) can drain all assets from the protocol.
Instead, each deployment of Compound III features a single borrowable asset. When you supply collateral, it remains your property. It can never be withdrawn by other users (except during liquidation). Capital efficiency increases too – collateral is more ‘useful’ when you know which asset is being borrowed ahead of time.”
The founder says the upgrade will make Compound cheaper, quicker, safer and more capital efficient. Compound III’s first deployment will enable users to borrow USD Coin (USDC) with Ethereum (ETH), Wrapped Bitcoin (WBTC), Chainlink (LINK), Uniswap (UNI), and COMP as collateral.
COMP is trading at $46.81 at time of writing. The 122nd-ranked crypto asset by market cap is down nearly 9% in the past 24 hours and remains down nearly 95% from its all-time high of $910.54, which it hit in May 2021.
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