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What is Compound Chain?

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Users can borrow and lend cross-chain assets between different blockchains based on Compound Chain

Original title: "Compound Chain Reshaping the Road to Finance"

Original source: bitouq

Compound Chain

Compound Chain is an independent distributed ledger capable of transferring 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 blockchain assets as collateral to borrow Compound Chain's native token CASH.

Functional cross-chain seems to have a better way

In my previous article "Cosmos Polkadot Internet of Things? ! In ", there is a detailed analysis of the current cross-chain problems. In the era of 2017-2018, when the public chain + cross-chain prevailed, the entire ecology was the barbaric growth of the standard Ethereum. However, when the market returns to calm, it can really replace or Products beyond Ethereum are not on the horizon, at least not yet.

Why there are so many public chains or cross-chain products, there are mainly two aspects, the first is to solve the high gas fee consumption of Ethereum The second is that most people think that a single ecology is prone to the problem of value islands in the future, so it is necessary to realize value transfer and supplement through cross-chain.

So with the crazy growth of DeFi on the Ethereum ecosystem this year, the Ethereum economy has become more prosperous, so under this background Compound released its own lending Compound Chain, a type of cross-chain product, is different from previous "Big Mac" type cross-chain products. Compound Chain does not intend to break the existing ecosystem, but serves as a "lending tool" to improve the interoperability between ecosystems . According to the official white paper, Compound Chain mainly solves the following problems:

Cross-chain lending business: supports cross-chain mortgage of different blockchain protocol assets Borrow and directly realize cross-chain transfer through Compound Chain. Reduce financial risk superposition: The Lego superposition feature of DeFi provides more composable financial products, but at the same time it also faces the problem of aggregating multiple products to make risks superimpose. Reduce transaction fees: Compound Chain supports the use of the native token CASH generated by lending to pay transaction fees.

How to cross-chain loan?

Users can upload assets on the supported blockchain to Compound Chain, through the supported The assets of the Compound Chain are used as collateral to borrow CASH (similar to MakerDAO's DAI), and the assets and CASH can be downloaded or redeemed to the supported blockchain.

Similar to most open ledgers, on the Compound Chain, key pairs (public and private keys) are used to sign for storage and transfer assets. Users will be able to interact with Compound Chain using key pairs on all supported blockchains. That is, 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.

On the other hand, when the user borrows, because the loan is carried out on the Compound Chain, all these mortgage assets do not need to be in the same block as the account address On the chain,

For example, an Ethereum address can use Compound Chain XRP as collateral, of course, the premise is that XRP is supported by Compound Chain.

DAI's Upgraded CASH

Compound Chain's native token (or unit of account) is CASH, which is similar to MakerDAO's DAI. The use of CASH mainly includes paying transaction fees on the Compound Chain. Users can borrow CASH and pay transaction fees by uploading supported mortgage assets.

Also like DAI, CASH will initially be pegged to the USD, but its peg can change through governance decisions. Unlike DAI, all CASH will earn continuous income from the interest generated by the supported blockchain loans. The precise amount will be one of many parameters determined by COMP holders participating in governance votes.

It can be said that this is a cross-chain + compound interest + governable DAI.

The birth of CASH completely highlights Compound's ambition to reshape the financial road, bringing CASH into multiple blockchains through lending business, which is different from the past Common cross-chain products are the most different. Ordinary cross-chain products usually focus on "hardly" combining multiple chains together through technical means, while Compound's lending in Ethereum has been large enough and mature enough, so powerful Trust endorsement and traffic will better facilitate the business expansion of cross-chain lending.

Perhaps, this is really the smartest one Cross-chain approach.

Next Lending King

As the underlying financial structure of DeFi, the lending business usually Ignored by many people, but in fact all financial portfolio products, derivatives, etc. are inseparable from the support of lending business. Many people have this question, why the income of lending platforms like Compound and Aave is not high, but the amount of locked positions is amazing. Let's look at the current data.

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MakerDAO, Compound, and Aave lending platforms account for half of the entire DeFi lock-up volume, and judging from the 90-day lock-up volume trend of Compound, they are always on the rise. It is currently close to 1.9 billion US dollars. Even though the mortgage mining of LP tokens is so popular, Uniswap's lock-up volume is still inferior to several lending platforms. This is because almost all financial portfolio products rely on the underlying lending business.

Nowadays, Compound is issuing cross-chain lending business. It is conceivable that its accumulation of funds will further expand, so the possibilities brought to the future of the DeFi ecosystem are also worth looking forward to of.