Compound Blockchain Update: Cross-chain interest rate market named Gateway
In the Ethereum DeFi space, Compound, the second largest money market, announced its new project "Compound Chain" in December last year. The project aims to create a distributed ledger system that enables the transfer of value and liquidity between different blockchains, thereby introducing more assets from different blockchains into Compound's currency market ecosystem.
On March 2nd, Compound released another update, stating that they have successfully developed a prototype for Compound Chain called Gateway. Following this announcement, the governance token COMP surged over 20%, surpassing $500 and approaching its historical high set in February.
Today, we're proud to announce a prototype based on the Compound Chain whitepaper:
Gateway is a cross-chain interest rate market that allows you to borrow assets native to one chain (e.g. ETH), with collateral from another chain (e.g. CELO).https://t.co/kFzxnz9SWc
— Compound Labs (@compoundfinance) March 1, 2021
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What can Compound's Gateway do? What is its relationship with COMP?
According to the official explanation, Gateway is a cross-chain interest rate market that allows users to borrow on one chain, such as Ethereum, using collateral assets on another chain, such as Polkadot.
Furthermore, those holding COMP tokens are likely concerned about the relationship between Gateway and COMP. The official statement indicates that Gateway is a Substrate blockchain Ethereum sidechain platform, enabling COMP token holders on Ethereum to upgrade the protocol without the need for a fork.
Validation nodes can earn a portion of the revenue from all lending activities, with the setup designed to incentivize Gateway growth.
The official statement mentions that through the efforts of validation nodes and developers, Gateway will become the backbone of the global interest rate market and will have the ability to support all markets.
Compound Chain Gateway's native token: CASH
Compound Chain will also have its native token "CASH" used for transaction fees within the system (similar to Gas on Ethereum). The token is not mined but generated by borrowing against collateral in the protocol. Initially, the price of CASH will be pegged to the US Dollar, similar to MakerDAO's Dai, but CASH's primary use is for paying transaction fees rather than a stablecoin. Additionally, according to the whitepaper, holding CASH tokens can provide continuous cash flow returns to holders.
The existing ERC20 token COMP will continue to exist as the governance token, controlling the development direction and governance of both the original Compound and Compound Chain. However, the whitepaper does not mention whether participating in COMP governance will yield CASH rewards.
Compound: We will start from the testnet
Compound, born on Ethereum, states that they will humbly begin by launching on a testnet on Ethereum.