Compound Announces Composite Chain to Bring CBDC to DeFi

Compound Labs unveiled a research paper last Thursday that explains how the company has developed a blockchain-tagged Composite Chain that will lead to money market services available over several networks.

The Composite Chain

According to the paper, Compound is currently facing some challenges on Ethereum, which include high gas fees, the inability to offer its services to assets on other chains, and the fact that any supported asset aggregates risk all assets supported.

The paper went on to state that the upcoming project would be able to support digital money from central and investment banks. This negates the earlier functionality of its platform which was restricted to blockchains that are untrusted and unauthorized.

The Composite Chain joins the wagon of chains working on blockchain interoperability. However, it differentiates itself from the others by working on an application-specific interoperability. Furthermore, Compound’s founder, Robert Leshner cites Terra, a stable Bitcoin and payment chain network, as inspiration.

Introducing the new Cryptocurrency MONEY

Compound Chain would be governed by COMP, the DeFi governance token used primarily for Compound, which helped guide the recent surge in product farming. However, the chain is also introducing a new crypto asset called CASH.

The crypto asset would act as the Chain’s native signal. It would be used to pay for transactions on the network and would be mined in the same way as DAI.

MONEY would be pegged to the US Dollar. However, the peg can be changed based on governance decisions. The pass will also allow consumers to earn a product against chain-originated loans. Each of these would be determined by COMP holders who would use the ticket for governance purposes.

How the Composite Chain Would Operate

When the crypto asset is uploaded onto the Compound Chain, it will be available for loan to others. Consumers would be free to borrow against their assets.

The Chain, as on Composite, would allow users to borrow supported assets, as well as other assets unique to the Composite Chain.

Leshner said those long on ETH would see the benefit of incorporating other chains as it would allow them to be able to port values ​​developed on other chains to be integrated into the DeFi app as a form of MONEY. It states:

“At the launch, the aim is to emulate Composite’s user experience but with a very clear path to be able to support all blockchain and all assets.”

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