CRYPTOCURRENCY UPDATES: THE UPGRADED DEFI LENDING PLATFORM FROM COMPOUND, FOCUSES ON SECURITY AND SCALABILITY. | VERY USEFUL 5 MIN READ:

THE UPGRADED DEFI LENDING PLATFORM
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WE WILL DISCUSS IN DETAIL ABOUT, THE UPGRADED DEFI LENDING PLATFORM FROM COMPOUND FOCUSES ON SECURITY AND SCALABILITY.

THE LATEST AND THE MOST UPGRADED DEFI LENDING PLATFORM FROM COMPOUND FOCUSES ON SECURITY AND SCALABILITY:

COMPOUND V3 RESTRICTS THE TOKENS THAT THE PROTOCOL WILL SUPPORT AND CHANGES THE WAY GOVERNANCE IS DONE.

IN THE MOST RECENT VERSION, THE PROTOCOL’S SUPPORTED TOKEN COUNT IS DECREASED, AND SAFETY AND SCALABILITY FEATURES ARE ENHANCED.

THE UPGRADED DEFI LENDING PLATFORM
THE UPGRADED DEFI LENDING PLATFORM FROM COMPOUND FOCUSES ON SECURITY AND SCALABILITY.

A NEW VERSION OF COMPOUND’S DECENTRALIZED FINANCE (DEFI) LENDING PLATFORM, KNOWN AS COMPOUND V3, HAS BEEN RELEASED. ACCORDING TO A BLOG POST PUBLISHED ON THURSDAY BY THE PROTOCOL’S CREATOR, THE LIMITED PRODUCTION RELEASE LOWERS THE NUMBER OF SUPPORTED TOKENS THAT CAN BE BORROWED AND COLLATERALIZED ON THE PROTOCOL.

THE MOST RECENT VERSION OF COMPOUND, COMET, ENABLES USERS TO BORROW A SINGLE, INTEREST-EARNING ASSET, USD COIN (USDC), WITH WRAPPED BITCOIN (WBTC) AS WELL AS NATIVE TOKENS FROM CHAINLINK (LINK), UNISWAP (UNI), AND COMPOUND (COMP) AS COLLATERAL. IN ORDER TO IMPROVE THE SYSTEM’S SECURITY AND SCALABILITY, COMPOUND V3 ALSO USES CHAINLINK AS THE PROTOCOL’S EXCLUSIVE PRICE FEED AND STREAMLINES GOVERNANCE SMART CONTRACTS. THE ASSETS SUBJECT TO THE LIMITED RELEASE PROTOCOL ARE RESTRICTED TO $100 MILLION, OR ROUGHLY 2% OF THE $3.8 BILLION IN ASSETS HELD BY COMPOUND V2.

ROBERT LESHNER, THE CREATOR OF COMPOUND, CLAIMS THAT COMPOUND V3 ENABLES USERS TO BORROW MORE TOKENS WITH LOWER LIQUIDATION RISKS AND FEES.

LESHNER TOLD COINDESK THAT “THE ARCHITECTURE OF [COMPOUND V2] WAS TOO RISKY IN THAT ONE BAD ASSET COULD THEORETICALLY DRAIN THE ENTIRE PROTOCOL.” THERE IS NO RISK TO USERS IN THE PROTOCOL OF OTHER ASSETS [IN COMPOUND V3] EVEN IF ONE ASSET FALLS TO ZERO.”

THE POOLED-RISK MODEL USED BY COMPOUND’S EARLIER ITERATIONS SUPPORTED NINE CRYPTOCURRENCIES, INCLUDING ETHER (ETH), DAI (DAI), AND TETHER (USDT). USERS WOULD DEPOSIT THEIR ASSETS INTO LENDING POOLS IN THE OLD MODEL, AND THOSE DEPOSITS WOULD GENERATE INTEREST. LENDERS RECEIVED CTOKENS, WHICH REPRESENTED THE VALUE OF THEIR DEPOSITS, IN RETURN FOR THEIR DEPOSITS. THE LENDER COULD THEN BORROW UP TO A SPECIFIED PORTION OF THE VALUE OF THEIR COLLATERALIZED ASSETS IN ANOTHER CRYPTOCURRENCY USING THOSE CTOKENS.

SWITCHING THE PROTOCOL:

COMPOUND V3 IS REDUCING THE NUMBER OF SUPPORTED TOKENS ON THE PLATFORM AND PUTTING MORE RESTRICTIONS ON UNAPPROVED FORKS.

A PROTOCOL CAN BE FORKED BY COPYING ITS CODE TO A DIFFERENT PROJECT. HOWEVER, SOME LOW-EFFORT COMPOUND FORKS HAVE BEEN COMPLETE REPLICAS OF THE PLATFORM WITH ONLY MINOR BRANDING CHANGES, CONTRARY TO HOW FORKS TYPICALLY MODIFY A PROTOCOL’S ORIGINAL CODE.

THE MOST RECENT VERSION OF COMPOUND MAKES FORKING THE PROTOCOL SUBJECT TO COMMUNITY PERMISSIONS. THE APPROVAL PROCEDURE AIMS TO MAKE EACH PROPOSED FORK’S CODE LESS VULNERABLE TO EXPLOITS.

COMPOUND HAS DEVELOPED INTO ONE OF THE MOST FORKED BLOCKCHAIN PROTOCOLS, BUT ISSUES HAVE ARISEN AS A RESULT OF HOW SIMPLE IT IS FOR LESS EXPERIENCED DEVELOPERS TO COPY OLDER VERSIONS OF THE PROTOCOL. A SPECIFIC “RE-ENTRANCY” BUG IN SOME OF COMPOUND’S OLD CODE, FOR EXAMPLE, WAS EXPLOITED IN SEVERAL COMPOUND FORKS THAT NEVER FIXED IT, RESULTING IN OVER $100 MILLION IN COMBINED LOSSES.

THE DEFI SPACE HAS BEEN CRIPPLED BY A SERIES OF EXPLOITS, INCLUDING THESE ATTACKS, WHERE MULTI-MILLION DOLLAR LOSSES DUE TO CODE EXPLOITS HAVE BECOME ALL TOO COMMON. A CHAINANALYSIS STUDY FOUND THAT DEFI PROTOCOLS WERE THE SOURCE OF NEARLY 97% OF ALL CRYPTOCURRENCY STOLEN IN THE FIRST THREE MONTHS OF 2022, AN INCREASE FROM 72% IN 2021.

CHANGES IN GOVERNANCE:

COMPOUND V3 WILL CHANGE THE PROTOCOL’S GOVERNANCE SYSTEM IN ADDITION TO INCREASING ITS SECURITY. INSTEAD OF A NETWORK OF CONTRACTS THAT ARE INDIVIDUALLY MANAGED, GOVERNANCE IN COMPOUND V3 IS CARRIED OUT THROUGH A SINGLE “CONFIGURATOR” CONTRACT.

FOR EACH DEPLOYMENT, EVERYTHING IS CONTAINED IN A SINGLE SMART CONTRACT, WHICH MAKES THE CODE BASE MUCH SIMPLER, ACCORDING TO LESHNER. WE BELIEVE THAT WILL INCREASE GOVERNANCE PARTICIPATION BECAUSE IT MAKES MANAGING AND GOVERNING VERY SIMPLE.

DUE TO THE PROTOCOL’S USE OF CHAINLINK FOR PRICE ORACLES, HOLDERS OF GOVERNANCE TOKENS WILL NOW HAVE MORE POWER TO INFLUENCE ECONOMIC POLICY ACROSS THE NETWORK. SUPPLY AND BORROW MODELS CAN BE DECOUPLED AND RUN INDEPENDENTLY USING CHAINLINK RATHER THAN RELYING ON A CUSTOM PRICE FEED FOR PRICE ORACLES, GIVING THE COMMUNITY MORE CONTROL OVER SYSTEM OPERATIONS AS A WHOLE.

CONCLUSION ON THE UPGRADED DEFI LENDING PLATFORM FROM COMPOUND FOCUSES ON SECURITY AND SCALABILITY:

TO CONCLUDE ON THE UPGRADED DEFI LENDING PLATFORM FROM COMPOUND FOCUSES ON SECURITY AND SCALABILITY, THESE UPGRADES WILL HELP PEOPLE TO BORROW MORE CRYPTO TOKENS.

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CRYPTOCURRENCY UPDATES: THE UPGRADED DEFI LENDING PLATFORM FROM COMPOUND, FOCUSES ON SECURITY AND SCALABILITY. | VERY USEFUL 5 MIN READ:

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