New Compound: a blockchain for central and investment banks?

New Compound whitepaper: A blockchain for central and investment banks?

Compound’s new whitepaper outlines plans to scale and design a blockchain that is no longer based on Ethereum. Among other things, it aims to be ready for the influx of central and investment banks.

On Thursday 17 December, Compound published a new whitepaper. A redesign of the blockchain should enable scaling and adaptation to the growing demands of the crypto ecosystem. A start date was not announced. Currently, the new design is being put to the test in a testnet.

Above all, they want to eliminate the limitations of Compound, which is currently based on Ethereum, with an independent blockchain. These limitations include Bitcoin Storm high transaction fees and the inability to interact with assets on other blockchains.

It is also hoped that assets on the new Compound blockchain will not be limited to other blockchains, but will also support assets from central banks (such as a central bank digital currency) and investment banks. In this way, Compound aims to play an important role in the global central bank arms race.

Centralised digital currencies, such as CBDCs or JPMorgan’s currency, require stricter regulatory conditions. Compound wants to meet these conditions for more restricted assets.

Compound plans new cryptocurrency CASH

Even if a new standalone blockchain emerges from Compound, it will retain the COMP token. Once the blockchain is live, a considerable number of new powers will go with the token.

In addition, a new cryptocurrency called CASH will be introduced. This will be used to pay for transactions on the network, among other things. Similar to the stablecoin DAI, CASH is created as a claim against a collateral pledge included on the compound chain and is linked to the US dollar. Like many parameters, this peg can be changed by votes of COMP holders. This voting system is called proof-on-authority.

The new blockchain of the DeFi project will be compatible with Ethereum from the start. Future compatible blockchains will be elected by COMP holders. The only requirement is that they support smart contracts. The smart contracts needed to move assets between compound and other blockchains are called „starports“.

Users should thus be able to offer any assets on the compound chain. Once an asset is uploaded to Compound Chain, it is available for lending to others. It is up to the users whether they want to lend it or not.

The COMP share price reacted to the announcement on 16 December by jumping to the US$180 mark, but was only able to hold the level for a short while. At the time of going to press, COMP is trading at 148 US dollars – still almost 25 per cent higher than 30 days ago.

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