Really interesting conversation.
Thank you Reserve Protocol to put it forward.
I do think that the risk-averse approach of Compound makes it incompatible with something like compUSD, and I do think that the plethora of CDP stablecoins will only see one or two winners over the long term. The other 20 will perish.
Hi @gonemultichain here is a possibly different trajectory.
I think there will be thousands of stablecoins of all types. Agree many will fail in the near and long term (typical in any growth markets at less than 1% adoption) but in the age of digital money with the advent of near zero production cost, near zero distribution cost and real time trading of any asset for any other asset, I would argue winners will be far more distributed than concentrated. I dont believe in the one stableoin to rule them all argument.
This has already played out (and continuing to do so) in industries where digital broke through earlier; video broadcasting, ecommerce, app store, etc. - we now live in a universe of millions of channels, stores and apps, with a longer tail of prosperity than during the industrial age. Stablecoins thus far, both in innovation and adoption are still mostly utilizing industrial age paradigms - I think the greater unlock is ahead of us over the next decade.
I agree and respect the conservative nature of the Compound ecosystem could deter from having its own stablecoin. The flipside of this is compUSD (driving revenue to Compound ecosystem) could become an important winner of the next decade+ cementing itself across many applications in the global financial system.
Personally I do not believe that Compound should facilitate the creation of its own branded stablecoin.
v3 has shown that simplicity and security in protocol design is a great attractor of value and is itself a revenue generator if it wants to be. Stablecoins are incredibly complex systems where keeping the peg becomes a monstrous task and a failure to do so can damage the protocol’s image.
Compound should instead focus on improving its own protocol offering and expanding to new markets, making use of existing stablecoins such as DAI, USDT to enable further v3 adoption and others not yet utilised by Compound such as EURC. These are stablecoins that various groups of people trust for varying reasons, and having to educate people on yet another DeFi stablecoin offering, how they are designed and how they are backed is becoming tiresome. What sets Compound apart is its end-user simplicity compared to other DeFi lending protocols. By maintaining this image, should there be a further large growth in TVL across DeFi, Compounds will have set itself up in a great position to capture the growth in value locked.
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Recircling up here on this discussion. All in all, we are in large support of something this this coming to Compound sooner than later and the team is in a great position to execute this strongly and it’s heartening to see the community engage thoughtfully on the proposal of compUSD as a revenue-generating stablecoin.
I agree with Cameron’s observation about Compound’s conservative stance, which has positioned it as a trustworthy entity in the DeFi space. As mentioned, the idea to emulate successful models like Maker’s sub-DAO, Spark Protocol and possibly integrating with evolving platforms like AaveV3 as 0xlide suggested, holds promise for enhancing liquidity and fostering growth in our ecosystem.
The suggestion to align with Torque to bring in new liquidity is insightful and could be a step towards achieving the larger vision of compUSD. Moreover, adapting to the advancements in the Aave community, could potentially improve liquidity and yield, aligning with the aim of capital optimization within the Compound ecosystem.
This proposal indeed presents an opportunity to not only diversify risk but also to create a robust revenue stream for the ecosystem. Overall, this is something we’d love to see happen and are looking forward to further discussions.