Compound NEEDS to improve the current oracle infrastructure as a matter of safety and growth. I think it is evident to users that the current solution is not ideal and not close to ideal. The event that occurred in November with Dai liquidations was preventable. Little has been done to prevent the situation from happening again with Dai or any other markets. In addition to preventing the November event from transpiring again, I think it is also in the protocol’s best interest to improve the oracle situation so Compound can safely support more assets.
Based on the conversation that has been had on the forum and Discord, the community is uncertain what the next steps are to improving the situation. I have seen discussion of adding Chainlink as an oracle provider, Makerdao’s oracle, additional exchanges, and decentralized exchanges as price feeds. There is no consensus on what is to be trusted.
While I am confident in using Compound and store assets on the platform, I think the protocol would greatly benefit from investing in better oracle infrastructure in the long-run. While the Open Price Feed built by the Compound team does a good job getting prices from exchanges onto the blockchain, it has no logic to average the prices or weight them by significance. We are fortunate enough to have many high-quality exchanges, both on and off-chain, that we should be utilizing.
I think the best next step is to build a medianizer (following Makerdao’s lead) that can handle multiple price feeds. To make the task less daunting, I suggest the first implementation tries to utilize Coinbase Pro, Okex, and Uniswap prices. The medianzier will need to consider when the last price of each of these sources is made so that it omits stale prices. The solution should also allow more price feeds to be added on at a later date.
Unfortunately, I lack the skills (learning) necessary to build this idea, but the community will likely reward who is ever successful if someone/group were to build it. Although I lack the technical skills, I know a good amount about incentives, liquidations, and exchanges, and I am willing to lend a hand in any way I can to make this improvement happen. I will also send personally $5k of COMP token to whoever successfully implements this, and if you are unsuccessful but can get to a full proposal, I will send $1k of COMP.
All questions, comments, and concerns are welcomed and encouraged. If you are an individual who is interested in building this and are unsure if the protocol will compensate and how much they might compensate you, please post those questions here and DM me if you want more certainty. While I am just 1 person and sub 200 votes, I would strongly advocate for a 1000 COMP ($220k) grant to whoever implements this successfully by building and implementing a long-lasting solution.