Compound "new weapon" Gateway: redefining the value of COMP

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特邀专栏作者

2021-03-07 02:58

This article is about 5511 words, reading the full article takes about 8 minutes

Gateway is a cross-chain tool, not a scalability tool.

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Gateway is a cross-chain tool, not a scalability tool.

foreword

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Recently, Fatty discovered that the lending agreement Compound started the gunshots on the DEFI cross-chain track.

On March 2, Robert Leshner, founder of the DEFI lending agreement Compound, published an article stating that the Gateway test network based on the Compound Chain prototype has been officially launched. Three months ago, the Compound Chain white paper released by the team mentioned a cross-chain distributed ledger system.

It is reported that the test network will add cross-chain support for more assets in the future, and the Gateway will be governed by COMP holders, such as the right to add new assets. In the next few months, Compound will audit the code base, conduct stress tests, and finally officially go live and connect the Gateway to the Compound protocol running on Ethereum.

It is worth mentioning that Gateway is a blockchain network based on the Substrate framework of Parity's blockchain development platform, which is more interoperable. Application developers can develop and build based on any underlying blockchain network, not limited to Ethereum network.

Robert Leshner said: "Gateway is a cross-chain tool, not a scalability tool. Gateway will provide a bridge in the future to achieve interoperability between blockchain networks without using token packaging (wrapping) or Other crappy ways."

In Robert Leshner's view, Layer 2 solutions like rollups are indeed important, but they ignore the interoperability of future multi-chains. Multi-chain means that different rule sets can communicate with each other and realize value transfer, while rollups are still limited to the governance structure of Ethereum.

From Robert Leshner's words, it is not difficult to see that Compound's ambition is not only an Ethereum lending agreement, but also has its own position in the cross-chain track. So, what is the strength of the Gateway it relies on? What new features will be launched?

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The Compound Chain white paper contains a lot of detailed information, but no one in the domestic blockchain industry seems to have translated it. The following is Fatty’s translation, if there is any error, welcome to shoot. Brothers and sisters, enjoy~

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solved problem

We know that in addition to AAVE in the lending field, Compound can be ranked first. So far, according to the data of Debank, it has locked up encrypted assets with a market value of 53 US dollars.

However, there are several limitations to this protocol:

First, the agreement gathers risks, and a non-performing asset will spoil the "one pot of porridge", which limits the scope of pledgeable assets.

Second, high transaction costs make small traders discouraged and discouraged.

Third, the protocol has no way to support assets that are not tokenized on Ethereum, which limits the application of the protocol.

If you can really get the interface of the central bank's digital currency ledger, it will be great. I hope Lechner is not bragging.

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Implemented architecture

Compound Chain is run by a set of distributed ledgers that run the same state transition function validators. Each validator node executes the same modification logic for each block packaged on the chain; moreover, it can also execute the "sidecar" function in the form of an off-chain worker on each block.

The core validator logic loop requires validators to continuously read from Starport contracts and confirm finalized user requests that they deem valid. When the verifier nodes reach a consensus that an event has occurred, the resulting data will be integrated into the Compound Chain. When enough validators consider the user request valid (by signing it), Startports will be willing to fulfill the order.

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account system

0x3fda67f7583380e67ef93072294a7fac882fd7e7

Compound Chain, like most public ledgers, realizes the transfer and storage of value through the signature of public key and private key. Users interact with Compound Chain through the blockchain public key and private key pair they use, such as Ethereum, Solana, etc.; on Compound Chain, all addresses can be identified by their peer chains, such as Ethereum:

The technology is that the fat man doesn't know much about the place, and he can't judge the level of the Compound Chain code. Later, let Shaodi Children's Shoes, the chief technical expert of Xiaojiao blockchain, do some research, and the fat man put the relevant research conclusions on the mustard circle.

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asset application

Compound Chain has the ability to generate native assets and can be integrated into the peer-to-peer chain; it can also allow assets on other peer-to-peer chains to be pledged to the Compound Chain, such as ETH, UNI, DOT, DIEM, etc.

Users upload assets to the Compound Chain through Starports, and Starports exists as a contract on the peer-to-peer blockchain (such as an Ethereum smart contract), containing the logic of locking assets until the Compound Chain validator node is released. Signed instructions from Compound Chain to Starport are called notifications.

upload assets

In the process of uploading an asset, the user follows the contract rules of the local Startport, such as locking the asset by calling the smart contract. Compound Chain validator nodes obtain event logs from peer chains and witness locking actions by monitoring related event logs.

When a node capable of packaging blocks sees a confirmed event, it signs a message on the Compound Chain attesting to it. Every other node will only validate the block if it believes the event to be true. For example, it itself sees the event in a sufficiently long head chain on its full Ethereum node.

This asset will be debited to the user's address. For example, Compound Chain pointed out that the Ethereum public address 0x3fda67f7583380e67ef93072294a7fac882fd7e7 now has N tokens of asset A.

release assets

A user can also extract and release assets from the Compound Chain at any time and transfer them to the original peer-to-peer chain, but there are two prerequisites:

First, both addresses and assets are originally on a blockchain;

Second, the withdrawn assets cannot violate the staking requirements of Compound Chain users.

The withdrawal and release of assets is a two-step process. First, the user signs an extraction request and submits it to the Compound Chain for queuing, waiting for the off-chain workers to process it and mark it to join the block.

Then, the withdrawal request is signed by the verifier to form a notification, and the user takes it back to Startport to redeem the asset.

In order to protect users from transferring unusable assets to Compound Chain, the number of assets that can be uploaded is 0 by default. Supply limits are enforced locally by Startports and updated via signed notifications.

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lend assets

If a user wants to borrow some assets, then his Compound Chain account must have enough pledged assets to ensure that his debt can be covered.

Compound Chain relies on a collateralization factor representing the utility of one asset for lending another asset, ranging from 0-1. The pledged asset does not have to be the original asset on the account chain, and assets on other chains can also be used. What does it mean? For example, a user with an Ethereum address can hold XTZ on the Compound Chain as a pledge asset.

The liquidation process absorbs debt from an account on a first-come, first-served basis. It is worth mentioning that in the process of returning the pledged assets of the account, users can get additional rewards, such as 5%. The price data for liquidation comes from the Open Price Feed, an oracle machine released by Compound itself.

Low-cost block verification allows the price to be uploaded to the Compound Chain in near real-time by the verifier as a block demand, without the need for "benevolent" users or incentives. In the future this system may be enhanced by a decentralized exchange on the Compound Chain.

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Native CASH assets

Compound Chain uses a native account unit - CASH, which is an asset generated by lending, similar to DAI in MakerDAO. The amount of CASH held by users and validators is always equal to the total amount of CASH debt. CASH is not only a lending asset, but also a consumer asset that pays for Compound Chain’s transaction fees.

For example, a user is currently short of cash flow on hand, and suppose he happens to have some pledged assets supported by Compound Chain. Then, he can upload his assets from other chains to the Compound Chain, and then the user can lend some CASH assets and use the CASH assets to pay network transaction fees.

In terms of interest income, the CASH held by users and verifiers can obtain continuous compound interest income through the interest rate index

Yield cash, and increment globally. If Yield cash is equal to 3%, and a user holds 100,000 CASH, after one day, the CASH in his hand will become 100,008.21.

The cost of lending CASH must be greater than or equal to Yield cash, otherwise the borrowing and lending of CASH cannot generate value. Interest and spread (Spread) are core parameters controlled by governance. CASH debt increases through the borrowing index, and CostCASH is shown in the figure below:

In terms of cross-chain, CASH can be transferred and released to other peer-to-peer blockchains. In this way, the value of any asset from any blockchain can be used into decentralized blockchains on Ethereum or other blockchains. in the financial system.

This process is similar to releasing and transferring an asset already held by Starport. The difference is that CASH is minted by the local contract of the Compound Chain, and the balance amount is recorded on the Compound Chain.

In order to allow CASH on the peer-to-peer chain to accumulate interest on the Compound Chain at the same time, to ensure that it is a homogeneous asset that cannot be arbitraged, the YieldCASH interest index is regularly synchronized with the peer-to-peer blockchain. Between periods, the interest index is calculated locally.

The availability of stablecoins, that is, having a very high collateralization factor, limits the potential fluctuation between the market value of CASH and the internal value of Compound Chain.

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Consensus and Incentive Design

Compound Chain is a Byzantine Fault Tolerant Proof of Authority (POA) network run by governance-approved validators. The block consensus function can remain correct and reliable in the case of 1/3 or less wrong validator nodes.

The responsibilities of a validator include: writing blocks, validating blocks generated by other nodes, monitoring events on the peer chain, signing peer chain notifications that are considered valid, and updating oracle (oracle) prices from time to time. Block finalization is separate from block writing, and block finalization occurs when more than or equal to 2/3 of the validators agree that a block is part of the chain.

Additionally, to maintain BFT guarantees, Starports requires >X validator signatures to process notifications, where X is greater than or equal to 1/3. Larger thresholds can be chosen to reduce the influence of malicious nodes.

In addition, in order to prevent the attack of a large number of "dust" transactions and consume the validator's bandwidth, although Compound Chain does not require fees during the process of uploading and transferring released assets, there will be a minimum value threshold limit.

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Chain Governance

The Compound governance system on Ethereum has established a distributed decision-making process that enables governance actions to flow to Ethereum Starport, where Compound validators receive instructions. This can generate the initial condition, and update the system parameters:

1. Initial validator set

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final summary

If the mature Ethereum DEFI protocol wants to generate high value, it needs relatively high-quality asset "feeding". Cross-chain is a more feasible, large-scale, and fast path to acquire assets. The essence of the major DEFI wars is actually a competition for relatively high-quality asset markets.

If Gateway can be successfully practiced, a large number of high-quality assets will be attracted to it, which will activate the value of Gateway and produce several effects:

First, MakerDAO’s type of over-collateralization protocol will be challenged. The CASH stablecoin generated by it can not only be generated by low-cost pledge of more assets, but also enter a broader public chain ecology, and there are also payment transactions The role of fees, the intrinsic value is more stable.

Second, due to the integration of lending agreements and DEX, a large amount of assets flow through the Gateway, which will generate a demand for transactions. Precipitating assets on Compound can provide part of the liquidity to the DEX trading pool, increasing the utilization efficiency of assets. Moreover, more composable and automated innovations can be generated based on this.

Third, the value of COMP tokens needs to be redefined and cannot be viewed solely from the perspective of a DEFI protocol governance token. The efficiency of asset usage and the effectiveness of the protocol itself on Compound are actually constrained. Gateway has created more room for imagination and freedom, and can connect with more assets, magnifying the value of the protocol.

The disadvantage of Compound’s cross-chain method is that it is more troublesome to transfer assets back to other chains, and it needs to be reviewed by off-chain workers, and it takes time to wait. Unable to come and go freely, there is a risk of being detained.

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