On August 26, the leading lending protocol Compound officially announced that its latest version, Compound III, has been launched on the Ethereum mainnet. In the initial stage of release, Compound III will only open one USDC base asset pool, and support five mortgage assets such as ETH, WBTC, LINK, UNI, and COMP at the same time.

In today's new version launch announcement, Compound founder Robert Leshner described Compound III as a more streamlined protocol, saying that it will put more emphasis on security, capital efficiency and user experience, and reduce complexity to a certain extent. Presentation is the most effective borrowing tool in the current DeFi world.

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Core Change: Asset Pool Isolation

in summary,The core change of Compound III is to abandon its pioneering "pooled-risk model" (pooled-risk model), and instead isolate each asset pool according to the difference of the underlying assets.The "basic asset" here is a concept relative to the "mortgage asset". Unlike the old version (Compound v2), Compound III clearly divides these two concepts in the new protocol.

Specifically, in Compound v2, since the protocol allows users to freely deposit (mortgage) or lend all supported assets, these assets can be regarded as both "base assets" and "mortgage assets". ". As shown in the figure below, Compound v2 on the Ethereum mainnet now supports 17 assets such as ETH, COMP, USDC, USDT, and DAI. Users can freely choose to deposit (mortgage) a certain token among these 17 assets, and then freely Lend another token, there is no limit on which token to lend, and you can even mortgage the loaned token to lend other tokens... All in all, these different asset pools are within the lending rules It is connected.

In Compound III, each pool will only have a unique underlying asset (the number of mortgage assets is not limited). As shown in the figure below, taking the currently launched USDC basic asset pool as an example, the pool supports five mortgage assets including ETH, WBTC, LINK, UNI, and COMP, which means that users can freely choose to deposit among these five assets ( Mortgage) a certain token, but no matter what is deposited, only USDC can be lent out, and the lent USDC cannot be deposited back into the pool as a mortgage asset again.

It is worth mentioning that under the new model of Compound III, the mortgage assets deposited by users will no longer be lent out, but will be statically stored in the contract. Therefore, as long as a reasonable mortgage rate is ensured, it will be There is no need to worry about the extreme situation of not getting back the mortgage assets (refer to the recent story of Aave on Harmony).

The reason for this change, Robert Leshner explained, is thatBecause under the old model that was completely opened up, the collapse of a single asset is very likely to drain the funds of the entire agreement, causing irreparable systemic losses.secondary title

Associated changes: interest rate, mortgage rate, liquidation rate...

Compound III inevitably has some knock-on effects due to the new model.

The most direct change is the interest rate. In Compound v2, since the assets supported by the agreement can be lent, any asset can be deposited to obtain a certain interest income. But in Compound III,Since only the underlying assets can be lent (USDC for the time being), only the underlying assets can generate interest income in a single pool, and other collateral assets that can be deposited (ETH, WBTC, LINK, UNI, and COMP for the time being) ) will no longer have any benefit.

In addition, under the new model of Compound III, the setting of mortgage rate and liquidation rate will become more flexible. Specifically, in the old version, the mortgage rate and liquidation rate setting of a certain token will directly correspond to all lendable tokens, but in Compound III,The upper limit of the scale, mortgage rate, and liquidation rate of different mortgage assets in each basic asset pool need to be determined separately by governance. These parameters will only correspond to this basic asset pool. In theory, there is an opportunity to achieve higher capital utilization efficiencysecondary title

Other Changes: Liquidation Mechanism

Another key change in Compound III is the iteration of the liquidation mechanism.

Previously, Compound v2 adopted the liquidation model of repayment on behalf of the borrower, which required the introduction of a brand new role "liquidator". When the liquidator has liquidation needs, he will repay the debt on behalf of the borrower and obtain the borrower's mortgage assets.

articlearticle), the role of "liquidator" is eliminated, and the agreement reserve will be responsible for repaying the liquidated position debt, and can also obtain the corresponding mortgage assets. The liquidation will only start when the different collateral assets in the reserve reach a certain threshold, at which time the relevant collateral assets will be sold at a discount.

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Summary: DeFi leaders are evolving

On the whole, Compound III is almost a redesign of the operating mechanism of the entire protocol. Leshner saysThe new version puts more emphasis on security, capital efficiency and user experience.The first two points are actually very clear. Compound III’s asset pool isolation model effectively blocks the spread of systemic risks. At the same time, the new mechanism of independently setting the parameters of each pool also gives the protocol more flexible and efficient asset utilization possibilities. As for the user experience In this regard, the operation level of Compound III has not changed much. Users who are familiar with DeFi lending can basically get started at a glance.

As far as my personal feeling is concerned, if Compound III will only focus on stablecoins as the basic assets in the future, it seems that its positioning should also be slightly adjusted (a feeling of approaching Maker from Aave?).

It is worth mentioning that Compound III followed Uniswap v3's practice in terms of code protection and chose commercial open source license (BSL) protection. The latter has won Uniswap a status advantage for a long time. From this perspective Compound still has quite strong confidence in its new version.

As for how big a wave this new version can make on DeFi, which has been silent for a long time, given that Compound III has just launched and its key multi-chain strategy has not yet started, it is impossible to give an answer for the time being. However, seeing that Curve and Aave are actively working on their own stablecoins, Synthetix and Yearn are about to launch v3, and dYdX has started its own application chain... quietly, the DeFi track seems to be lively for a long time, maybe it is also It's time to focus your attention again.