DeFi lending protocol Compound printed a white paper on Thursday introducing Compound Chain, a brand new blockchain geared toward offering cross-chain worth switch functionality.
Reactions to the information have been overwhelmingly unfavorable with many respondents on social media taking concern with the perceived centralization considerations related to the venture. Maybe anticipating a unfavorable response from “Crypto Twitter,” Compound Labs even restricted replies on its tweet asserting the venture.
In accordance with the white paper, Compound Chain is a blockchain structure that may permit cheaper worth and liquidity switch throughout totally different distributed networks. The venture will make the most of Proof of Authority, or PoA, consensus amongst a gaggle of validators to manipulate the chain with CASH because the native stablecoin foreign money.
Whereas not heavy on particulars, the white paper did qualify CASH as being much like MakerDAO’s Dai. Nevertheless, in contrast to Dai, CASH might be used to settle transaction charges on the Compound Chain.
As a part of Thursday’s printed documentation, Compound Chain is a response to 3 main issues — excessive fuel charges, aggregated dangers related to supported property, and the shortcoming to deal with non-Ethereum-based property. Through the use of PoA amongst a restricted variety of validators, Compound Chain can, in idea, supply sooner transactions.
Nevertheless, as is usually the case, greater transaction throughput is achieved on the expense of decentralization. Certainly, critics like Set Protocol’s Anthony Sassano argued:
“Although the explanation [ETH gas fees are] costly is as a result of Ethereum’s throughput is restricted as a consequence of its excessive decentralization – Compound Chain will solely have low charges as a result of it is going to be a lot, a lot much less decentralized because it’s a PoA chain (the place the validators are chosen by COMP governors).”
Moderately than creating a whole blockchain, Sassano opined that Compound may obtain the identical intention utilizing layer-two options on the Ethereum chain. Nevertheless, layer-two deployments additionally include added composability considerations, particularly for DeFi customers.
Defending the venture’s determination to create a brand new blockchain, Compound Finance founder Robert Leshner highlighted that Compound Chain would allow bridging crypto property issued on different blockchains to “the place DeFi occurs,” that means Ethereum. Leshner singled out property like central financial institution digital currencies (CBDCs) as doubtless use circumstances for the cross-chain characteristic of the deliberate community.
As beforehand reported by Cointelegraph, the Compound Finance founder is assured of future synergistic relationships between both centralized finance (CeFi) and DeFi. Nevertheless, the preliminary white paper didn’t comprise an evidence of how the venture will clear up compatibility points whereas transporting non-Ethereum-based property to the Ethereum chain.
The information of the deliberate Compound Chain blockchain is coming lower than per week after a deliberate compensation fund for customers affected within the massive Dai liquidations that occurred on Nov. 26 failed to garner enough votes.