Decentralized Finance (DeFi) lending protocol Compound has announced that it has officially launched its Compound III (V3) on the Ethereum mainnet.
Unlike in the past, this new version only supports one "underlying asset" for lending. It provides other encrypted assets as collateral, getting rid of the "mixed risk model that users can borrow any asset".
Currently, ETH, WBTC, LINK, UNI, and COMP have been used as collateral to lend the underlying asset USDC.
Since Compound V2 uses the pool risk model as the way most loan agreements like Aave currently work, users can borrow any digital asset, but poorly performing assets can threaten other assets in the Compound lending protocol, resulting in the insecurity of investors' funds.
Therefore, this upgrade allows users to limit the size of individual collateral assets within the market to limit risk.
This improved security comes at a price. The collateral provided will no longer earn interest.
Compound founder Robert Leshner said that...
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