Compound (COMP), the popular decentralized finance (DeFi) protocol, has released a new version of its protocol, called Comet. The new version is touted as a “game-changing upgrade” for borrowers in the DeFi space.
“Compound III is an enhanced version of the protocol, with a focus on security, capital efficiency and user experience. Complexity was removed. What remains is a more efficient tool for borrowers on DeFi,” wrote Robert Leshner, the founder of Compound.
This new version of the protocol features several improvements, with the biggest change being the introduction of a new lending model.
Compound enhances risk management
The Compound v3 release will allow users to borrow the USDC stablecoin using as collateral Ethereum (ETH), wrapped Bitcoin (wBTC), as well as the native currencies of Chainlink (LINK), Uniswap (UNI) and Compound (COMP), with the oracles of Chainlink to be used for the dedicated protocol value stream.
“While you will no longer earn interest on your collateral, you will be able to borrow more, with less risk of liquidation and lower liquidation penalties, while spending less on fees,” Leshner wrote.
More security
To further limit risk, the Comet upgrade, in line with the approved governance proposal, introduces limits on the size of assets that can be pledged as collateral. The new version of the Compound Protocol features a redesigned risk management and liquidity mechanism, enhancing the security of the protocol.
It also introduces advanced account management tools for developers, which allows new applications to be built on top of the protocol.
Changes the governance system
Compound v3 will also change the protocol’s governance system. Instead of a network of individually managed contracts, the new governance model is carried out through a contract “configurator”.
This effectively means that all governance functions are contained in a single smart contract, simplifying both the protocol code base and the actual participation in governance.
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