Change my mind: Compound protocol is moving too slowly

I realize this might be a bit “off the path” for this forum, but I’ll give it a go. I’d like a “change my mind” view of a viewpoint I’ve been thinking about for Compound: The protocol is progressing too slowly.

Changes are not happening at a “defi-pace”. I realize this does count as a positive for the stability and probably trust for a lot of involved parties, but it also does pose the question if Compound can keep up with the other protocols like Aave.

What is the in pipeline for Compound? Short term? Long term? Why should I believe Compound will be the leading platform in the time to come?

I hope to be thoroughly impressed :slight_smile:


Working on it now, would you like to play a role?

I agree with you, and don’t think this is “off the path” for a forum. Yes, stability is important for maintaining user trust, but it must properly balance with innovation for the project to be a success.

The reaction to the oracle issue highlights this concern most for me. It has been deliberated on for months, meanwhile our users’ collateral remains prone to another DAI liquidation event. Now we are looking at building a medianizer, which will take even more time, rather than quickly fixing the situation with a 3rd party oracle like Chainlink.

That said I think many in the community share your sentiment and are working toward creative solutions toward improving governance moving forward. The most notable development of late was @arr00 creating a gasless voting mechanism ( I feel confident there will be more with similar talent and skills who step up to the plate.


Chainlink alone won’t work, single point of failure.

That’s not true. Chainlink is a decentralized oracle network consisting of hundreds of public nodes. Other oracle projects feature only a small number of nodes, creating extremely minimal Sybil-resistance or decentralization.

There is a reason Aave, Synthetix and other top DeFi projects who are moving significantly faster than Compound utilize it.

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Nothing wrong with Chainlink, great product, but like you said, everyone is using it, then, this is bad for decentralization.

Coinbase price feed and Compound governance structure are decentralized parts of protocol?
Nobody cant tell us what was going wrong on “DAI liquidation” event, why?
It would be useful to have insight into on-chain data when something goes wrong.
Especially when it comes to your funds. Do you agree?

That’s like saying Ethereum isn’t decentralized because most of DeFi uses it, which of course isn’t the case.

Decentralization comes from the number of independent nodes in a system, and right now both Ethereum and Chainlink are leaders in their respective spaces, which is why they are the most trusted and used.

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So comparing Ethereum to Chainlink is incorrect: different tech and built for different purposes.
Let’s go back to this “DAI liquidation” issue, what are the possible approaches?

  1. Use both Coinbase and Chainlink oracle. What if one of them got hacked, Dai goes to $3? Then avg of two $1.5, not solving it.
  2. Amend the contract. Since stable coin like Dai eventually goes to $1, delay liquidation, and set aside some Comp for risk control?
  3. Warn user the liquidation risk. Market volatility is a norm, maybe offering some insurance coverage?

You get the point, but

  1. because of Coinbase price feed people was liquidated. Liquidation price was 377:1 (DAI: Ether). Fact is that you can mint DAI on Oasis whenever you want - for 1$. Coinbase didnt provide single piece of info for that event (we can compare this with Coinbase support efficiency). Check Ethereum price now and you can imagine user losses, provided that it is not a bad risk management of the user - the protocol simply failed.
  2. Delay liquidation is great solution, Aave has similar approach with 5% delay. Why Compound implementation looks like place for liquidators and users are not protected (users with real business)?
  3. Please, you cant shift responsibility on users risk management. Stablecoins exists for reason - to reduce volatility, thats stablecoin purpose. I write enough about that in other threads - i will not repeat myself.

I as a Compound user am DISAPPOINTED with the approach of the token holder (giants). They dont care about anything except their crypto bags. They didnt answer any questions about the biggest liquidation event and they didnt provide any data about that. The relationship with Coinbase is more important to them because there is money and we all know that Coinbase and DeFi are opposit terms.
@TragedyStruck is brought out great questions about protocol and i also want to be impressed with answers

Yes - they are different tech, but their approach to decentralization (via a vast network of nodes) is analogous, so the comparison stands. Neither become less centralized because more people use it. In fact, more usage encourages more nodes to join and actually increases security.

How would this occur with Chainlink? It’s prohibitively expensive as nodes are not sourcing data from any single source, but rather from a variety of aggregators who are in turn sourcing from the entire market.

That said…I do think you bring up some good points regarding a liquidation delay, insurance coverage etc. But in regards to the oracle we should just keep is simple so we can move forward QUICKLY.

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To be honest, I don’t know how Chainlink works, and having hard time understanding these marketing material, but anyone can provide market data service, and it doesn’t require blockchain at all.

But on blockchain data is transparent ( on Coinbase isnt ).

And you cant criticize something without arguments. So, if you dont have knowledge about project, you cant bring out valid argument.

Thats not true, protocol need data price oracle that reflects the price of asset closest to the global price of that asset. I understand that task is very hard because exist trade-off between flexibility, trust and cost for set-up reliable oracle. For example existing Compound solution isnt reliable because relies on centralized system.
Unreliable data price oracle allows a hacker to arbitrate with $30 of Ethereum and flashloan, and makes damage to the protocol and users.

Valid points. Can you provide some details with an example? For an asset like COMP, where does it get all prices? How does it validate the prices? And how to calculate the final price? Are these information on the blockchain as well?

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I am follow simply logic.

  1. Market price is equillibrium of buyer and seller preferences and their perspective of value
  2. In “DAI liquidation” event, price of DAI reaches 1.3$ on Coinbase open price feed but global market price was still 1$
  3. I am very interesting who will pay 1.3$ for DAI when he can pay 1$ everywhere or mint DAI on Oasis (1$). Is this normal and rational behaviour?
  4. Some people here say that was a structural DAI problem but didnt - because if this is true global price will also spike to 1.3$. In scenario where global price spike to 1.3$ we can talk about bad users risk management.
  5. In this case that is clear maniplation with front running elements and of course we cant get transparent information from Coinbase because they are centralized platform.
  6. For Chainlink or Maker oracle solution data are available ( deep dive in Oracle and Medianizer threads )

In my opinion Chainlink is best solution in short-medium terms but in long term best option is that Compound build own oracle. Everything is better then present solution. But we also know close cooperation between Compound and Coinbase because Coinbase Venture is early investor in project. Because of that I dont expect quality solution for that problem.
@getty has started building a medianizer and I am supporting it because in the current situation this is the best solution (situation si that majority dont want 3rd party solutions)

I’m looking for answers and facts, not a story. Thanks for your input.

Maybe you need to read few threads on this forum and no just show up here with 20 words. Do you homework or even read Chainlink whitepaper but I think that every text longer than 20 words presents difficulties for you.
Good luck

This is pretty clear. I’m all for a debate, as long as it’s in good faith, which I don’t feel this was.

Anyway, thanks for trying to explain the situation in more detail @dabar90, I’m sure others will find it valuable.

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