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The team behind the DeFi lending protocol Compound, Compound Labs, has rolled out a code for a multi-chain lending protocol dubbed Compound III.
The vice president of engineering at Compounds Lab, Jared Flatow, announced the release of Compound III in a post published on the 29th of June. In the announcement, Flatow said the team hopes the code will “form the basis of a multi-chain deployment strategy: comet.”
The Compound Labs executive noted that Compound III is designed to serve borrowers. To start with, the code is simple to govern and also gas and capital efficient. The code repository utilizes a business source license that Compound governance is capable of granting usage to. Compound governance can achieve this by changing a new ENS domain owned by the community, compound-community-licenses.eth.
The code has also been updated to become a sophisticated tool for managing and testing deployments. The code used users’ feedback from prior versions and years of experience in redesigning.
Compound Labs Releases Code for Compound III
Although Compound (COMP) has unveiled the code for the multi-chain lending protocol, the actual protocol is not yet launched. Regardless, the code is a significant step in the reality of cross-chain decentralized lending on Ethereum virtual machine-compatible (EVM) chains. Flatow added that developers can “begin integration with Compound III, and auditing/suggesting improvements to the codebase.”
Furthermore, the vice president highlighted the major changes from the existing protocol. While all other assets are collateral, the deployments of Compound III feature a single borrowable base asset. The benefit is there is less risk and improved capital efficiency. In addition, there are separate borrowing collateral factors and liquidation collateral factors that secured borrowers from early liquidation. Another major change is redesigning of the risk management/liquidation engine.
“An abstract incentive metric is built natively into the core contract, to enable rewarding user activity from day one of the protocol. A rewards system is elegantly added on top to provide incentives similar to v2, but flexible enough to be extended by governance in new ways.”
In addition, Flatow mentioned the plans Compound has for the coming weeks.
“Over the coming weeks, we look forward to working with the community to finish auditing the protocol; learning the current testnet; releasing an initial deployment on Ethereum, with interfaces, liquidation bots, and tooling; and beginning deployments across other EV chains with tools for governance to manage those deployments.”
Last year, Compound made a costly mistake of giving out $90 million to its users due to an upgrade that went wrong. After the error, Compound Labs founder Robert Leshner asked users to return the money. Suggesting that they keep a small percentage to themselves, he threatened several consequences on anyone who fails to return the funds.