Compound was designed as an experiment — a first of its kind protocol to enable the transparent, frictionless borrowing and lending of Ethereum assets. When we launched the first version of the protocol in September 2018, our team had no idea what to expect, or what we would learn.

Suffice it to say, we’ve been blown away by the response. The Compound protocol has:

Enabled millions of borrowing, and currently holds ~$24 million of assets

Empowered developers, including Dai payment use-cases, interest-bearing meta stablecoins, open finance interfaces, and dozens of projects in the works

Inspired open finance experimentation, debate, competition, and innovation

Compound v1 is currently the second largest DeFi project

The future of Compound

We’re proud to announce that our team has spent the past months analyzing, designing, and testing a second version of the Compound protocol, which our team has been referring to as Presidio internally. Our goal is nothing short of complete transformation — a version of Compound that is expansive, community governed, cleaner, and upgradable. Here are a few of the changes we have in store:

Granular risk modeling — most lending platforms allow you to borrow 66.6% of the value of your collateral (including the original Compound). This forced the protocol to only support large, liquid assets (including Ether, and a few of the top token projects). Now, each asset will have its own collateral factor, so that Compound can support every asset , not just large and liquid ones. That means your favorite, obscure utility token.

— most lending platforms allow you to borrow 66.6% of the value of your collateral (including the original Compound). This forced the protocol to only support large, liquid assets (including Ether, and a few of the top token projects). Now, each asset will have its own collateral factor, so that Compound can support , not just large and liquid ones. That means your favorite, obscure utility token. Asset gateways — the original Compound was essentially a single contract. Now, each asset will have its own smart contract gateway, customized to the underlying asset. This will allow Compound to support Ether without “wrapping” it first, ERC-721 token pools, and token standards that haven’t been designed yet.

— the original Compound was essentially a single contract. Now, each asset will have its own smart contract gateway, customized to the underlying asset. This will allow Compound to support Ether without “wrapping” it first, ERC-721 token pools, and token standards that haven’t been designed yet. Planned Governance improvements — the mechanics for each asset can be upgraded over time. For instance, the ZRX gateway can be upgraded to allow ZRX token-holders to govern ZRX’s interest rate model, borrowing parameters, or price feed. One day, every token might become a Compound governance token.

If you’d like to learn more, join our Discord or tweet at us. We’d love to hear from you.