DeFi-project Compound announced the development of its own blockchain

DeFi project Compound today presented a white paper of its own blockchain - Compound Chain. According to the developers, this will allow bringing new assets from various blockchains to the protocol.

The Compound Chain is described as "a distributed ledger capable of transferring value and liquidity from peer ledgers." In other words, users will be able to leverage assets from outside the Ethereum ecosystem, such as Polkadot, Solana or Tezos, in crypto lending on the Compound platform.

The Compound blockchain will use its own cryptocurrency called CASH. It will allow you to pay commissions for transactions. The Compound Chain will be managed using existing Compound (COMP) tokens on the Ethereum blockchain. Proof-of-Authority (PoA) was chosen as the consensus mechanism.

The need to develop a Compound Chain in the project is explained by several reasons:

1. Risks of limited support for assets are that one of them is able to cast a shadow on all the others, reducing the ability of users to provide collateral;

2. The high cost of transactions limits the ability to make small transfers;

3. Currently, the protocol does not have the ability to support assets that are not represented on the Ethereum blockchain.

“Compound Chain is a reimagining of the Compound protocol as a standalone distributed ledger that can remove these constraints and prepare proactively for the rapid proliferation and growth of digital assets across a multitude of new blockchains, including Eth2 and central bank digital currencies,” the white paper says.

To interact with the Compound Chain, users will use keys in existing blockchains and be identified by public keys in them. The transfer of assets to the Compound Chain will be carried out through the so-called "startports", which will be presented as smart contracts of the respective blockchains.

The Compound team is currently preparing a limited functionality testnet for release early next year. Over the coming weeks, developer and validator documentation will be published.