Pro
Compound’s Gateway to the Future
On December 17, Compound Labs released the whitepaper for Compound Chain, now known as Gateway. Gateway is a Substrate based blockchain that is currently running on the Gateway testnet as of March 1. Functionally, Gateway will act similarly to the current Compound protocol on Ethereum, except:
- Gateway offers the ability to borrow and lend any asset from any blockchain
- Interest is earned and paid in dollars (stablecoins), using CASH - Gateway’s native unit of account
- Gateway’s risk engine is more robust; risk is based on the volatility of assets you use as collateral, as well as the assets you borrow — leading to capital efficiency improvements for less volatile assets.
Background
Compound is a leading money market protocol and one of the pioneers of liquidity mining - a bootstrapping mechanism that ignited the past years’ DeFi boom. It allows users to lend and borrow assets from a pool of collateral and sets interest rates algorithmically using an interest rate model based on supply and demand. The utilization ratio U for each market a unifies supply and demand into a single variable:
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