Decentralized finance (DeFi) lending protocol, Compound Finance, has announced a new blockchain platform to provide cross-chain interest rates and collateral markets.
First announced on Dec. 18, Compound Chain promised a multi-asset platform to enable the transfer of value and liquidity between peer ledgers.
The DeFi protocol has now announced a prototype called “Gateway” which has been built on the Substrate blockchain platform.
The new chain will allow users to borrow assets native to one chain such as Ethereum with collateral from another chain such as Polkadot.
Cross-chain Compatibility
For DeFi to work as intended, assets need to be interchangeable across various networks. At the moment, this isn’t easy to do with all the competition between them.
Compound aims to alleviate that issue with Gateway and has chosen the next-generation blockchain architecture, Substrate (which also powers Polkadot) to do so.
“We chose Substrate so that we could focus on building application code, instead of inventing consensus algorithms; it’s a modern framework built on a modern language, Rust.”
Gateway has a native token called CASH which is used to pay interest on collateral deposited. It also has a “risk engine” which operates using the volatility and liquidity of assets on the platform.
Network validators can be nominated by COMP token holders. These validators will then earn a portion of all interest in every market in addition to transaction fees.
Compound has lofty ambitions for its new project, stating;
“Gateway will evolve into the backbone of a global interest rate market, capable of supporting any asset — including the wave of currencies, assets, and tokens yet to be created.”
The blog post added that Gateway is currently running as a testnet, connected to Ethereum’s Ropsten testnet. Audits will be carried out before the mainnet launch, though there was no date specified for this.
COMP Token Price Outlook
Compound’s native token surged 5% on the day in response to the announcement. At the time of press, COMP was trading at $519 following a gain of over 50% in the past thirty days.
COMP is now not far off its Feb. 13 all-time high of $535 according to CoinGecko. It’s ranked 41 in the market cap charts with $2.2 billion.
In total value locked terms, Compound Finance is ranked second according to DeFi Pulse with a touch under $5 billion locked. Its all-time high TVL happened on Feb. 22 at $5.5 billion.
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