COMP Everywhere

Proposals
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Compound Everywhere:

TLDR:

  1. Maxed out Supply caps is a broken product and bad UX.
  2. Compound DAO needs to believe in its token COMP. List on COMP on all markets and chains.
  3. COMP as collateral liquidations can be absorbed by the Protocol Reserves and or Treasury.

Meaning, the Reserves ought to purchase all of the liquidated COMP on these markets at some rate.

WHY:

  1. COMP Everywhere is a COMP Downside Protection Program, subsidized by liquidations at a discount.
  2. Compound DAO will be able to build Larger Liquidity on deployed chains.
  3. Opens opportunities for structured products to earn COMP yield on COMP Collateral.
  4. Deepen Compound’s relationships with other DeFi Protocols, by creating niche market strategies.

COMP Buyback Program

POTENTIAL OBJECTIONS:
  • COMP being absorbed by Protocol Reserves could lead to a depletion of Reserves.
  • Large COMP holders could intentionally offload COMP positions into Reserves Liquidity.

Allowing reserves to absorb COMP, but not allowing liquidators to buyCollateral() means that COMP is offering a floor price for its token. This strategy is powerful because it gives Compound DAO a way to accumulate COMP, using an edge reserved only for the Protocol. The resulting buy pressure from COMP is positive, and signals to COMP holders that fundamentals have improved, as well as token utility.

Absorbing COMP liquidations also means designing cyclical processes to re-distribute COMP tokens as incentives for markets. Circulating COMP this way might be a more sustainable design than our current system.

SOLUTIONS:
  • Set a limit to the amount of COMP which can be deposited as collateral on each market.
  • Create a Campaign which surrounds this change in COMP tokenomics with an intention to drive usage of these new collateral listings.

BUILD COMP Liquidity

POTENTIAL OBJECTIONS:
  • We ought to rely on building COMP liquidity on L2s instead of relying on Protocol Reserves.

COMP is listed as collateral on Mainnet on the USDC and USDT Markets. These markets are supported by 1.4M in Univ3 liquidity on Mainnet. However, we do not have a coherent strategy to achieve comparable liquidity on Base, OP or Arbitrum.

The ability to deposit COMP as collateral, and borrow ETH, AERO, or DOLA leads to LP strategies, where those borrowed assets can then be deposited into Liquidity Pools, and compounded via AERO, VELO or RAM Farm Incentives.

SOLUTIONS:
  1. List COMP as Collateral on the AERO Market on Base.
  2. List COMP as Collateral on the ETH Market on Arbitrum.
  3. Deposit COMP as Collateral, and then LP with the Borrowed Asset to earn yield and build Liquidity
  4. Compound that yield into more LP, or sell yield to deposit more Collateral.

By actively pursuing these strategies, COMP liquidity will increase on these markets, and collateral caps will be able to expand.

COMP Everywhere enables these strategies.

COMP on COMP

“COMP on COMP” means the ability to deposit COMP as collateral, and then borrow an asset that can earn yield, and then sell that yield for more COMP. Strategies like this carry some risk, and would require automated, structured vault products to be built.

Once built, this pattern can be applied as a treasury management tool, toward other existing collateral types. COMP on COMP happens to be the strongest use case for these structured products, but this pattern of structured product represents an opportunity to grow sticky TVL and fees, by treating each collateral type as its own “strategic niche”.

For Example:

Do end users have a clear and definable use case for cbBTC? Are there structured products using cbBTC as collateral on Base? Is there a way to earn cbBTC Yield?

It makes sense to be sure that COMP is the first to benefit from this exploration, and that this pattern could be repeated for other currently existing collateral types.

DeFi Partnerships

Inverse Finance is an interesting DeFi experiment to consider, because COMP / DOLA are our largest LP pairs on Optimism and Base. This is possible, because Inverse Finance has listed COMP as a collateral type for borrowing DOLA, and has enabled bridging to Base and Optimism.

The Current Partnership strategy looks like:

  1. Deposit COMP as collateral
  2. Borrow DOLA
  3. Bridge DOLA to OP | Base
  4. Bridge COMP to OP | Base
  5. Pair COMP / DOLA LP
  6. Deposit LP
  7. Vote for LP and farm yield.

It’s possible to deepen these existing arrangements through two decisions:

  1. Launch a DOLA market for Base / Optimism.
  2. List COMP as Collateral on the DOLA market on Base / Optimism

Once this structure exists, it would be possible to deposit COMP, and borrow DOLA, and then add LP to the existing pools.

A stronger, reciprocative relationship with Inverse Finance would likely lead toward deeper pools, and coordinated voting to direct incentives toward those pools. It would also likely lead toward a high utilization rate for this market.

Following the links above, you can see the Inverse Finance DeBank Treasuries for their Velodrome and Aerodrome Positions. Compound could be expanding the positive sum games that are possible with Inverse Finance.

Using COMP as collateral to borrow farmable assets is an entry point into this realm of partner related strategies, and these strategies could be repeated with other partners.

CONCLUSION:

The following actions would be strategically useful to Compound:

  1. List COMP as collateral on AERO Market on Base
  2. List COMP as collateral on ETH Market on Arbitrum
  3. Deploy DOLA market to Optimism or Base or Both
  4. List COMP as collateral on DOLA market on Optimism or Base or Both

In each of these markets, all liquidations are to be absorbed into Reserves, but not available for external liquidators to call buyCollateral().

Gauntlet determines Collateral caps for COMP, as well as Parameters for the DOLA market.

This represents a radical change in the way that COMP is used as a token, but the potential for growth is compelling. These decisions would open up areas of critical innovation for expanding COMP liquidity on Layer 2s, and would have positive second and third order effects.

COMP Everywhere, as a strategy opens up a broad range of benefits, and builds value for Compound.

6 Likes
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As someone that has been buying COMP, liquidity is an issue on ETH much less the other chains, you pay a 5%+ premium on anything over a couple thousand.

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Yea - this is something which we could fix more easily with COMP as collateral on chains like:

  • Optimism
  • Arbitrum
  • Base

You can check Dexscreener:
https://dexscreener.com/search?q=comp

Search for COMP, and then check out the size of the liquidity pools that you see there.

On Mainnet, the pool is 1.2M in size, whereas the pool on Optimism is only 98k.

COMP Everywhere enables LP strategies which could build these pools.

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I was using mainnet. 1.2M is just not enough. I was planning to buy 100-200k but anything over 10k get’s ridiculous.

1 Like
6

100% agree. It’s next to impossible to trade onchain spot markets. For the time being I recommend Cowswap you can make intent based limit orders. In 2025 the Growth program will start working on Liquidity depth.

3 Likes
7

This is a great proposal. It would be beneficial to backtest or simulate the effects during a black swan event, similar to the one experienced during the governance hack.

2 Likes
8

I agree liquidity is low for COMP.

I like the idea of COMP being everywhere but am hesitant given the risk it could provide to other assets.

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@robinnagpal and @mexilc

COMP has already been distributed.

The risk we are taking is that the Reserves will absorb liquidated COMP, and these reserves will be built up by liquidating other assets.

The benefits are that COMP whales such as AlphaGrowth, or the Treasury, or the Grants program, or large holders will be able to leverage COMP to build liquidity, and arbitrage rates accross chains.

Over-Utilized Markets, are causing protocols to unwind their positions, and lack of Liquidity on L2s, is due to a lack of LP Strategy, as well as a lack of assets to build up those strategies.

Adding COMP as collateral on all markets solves both problems, while making COMP a more attractive asset for people to hold.

The question of Risk – is probably one of appropriate Supply Caps, and Liquidation Penalties.

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Wouldnt making a staked COMP (distributing a portion of accrued reserve factor fees) also make COMP more attractive?

I’ve been a long time lurker, feels like Compound needs a catalyst to drive COMP interest from LPs or users.

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Yes, Staked COMP would make COMP more attractive, and it would not have a liquidation threat – whereas collateral deposit would.

There are legal blockers toward enacting Staked COMP right now.

Once COMP Everywhere is enacted, we will have the collateral to solve cross-chain rate arbitrage opportunities, and build DEX LP on Aerodrome and Velodrome – both being a source of yield for COMP Collateral Depositors, in the form of vaults.

That is in addition to the partnership collaborations, and effective buyback program from liquidated COMP positions, which are absorbed by treasury reserves.

1 Like
12

I mean, I assume most of those will go away in a couple months so perhaps we can revisit then?

1 Like
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Since the reserves will be used, I don’t see any downsides.

I have been part of the Compound community for some time but never thought about this in depth.

Perhaps every new market we deploy should have COMP as collateral by default, enhancing the utility of the COMP token.

4 Likes
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We can deepen Liquidity on L2s.
We can create equilibrium in market utilization on all markets.
We can build partnerships.
We can create structured products, which provide yield for COMP holders.

In order to do this, we need to list COMP on every market, moving forward, and retroactively.

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Every “decent” market. For instance we keep telling the guy pushing pulsechain in the discord to go away. I see no need to have liquidity for COMP on L2’s btw as long as it can be easily bridged to ETH. The cost to achieve liquidity on dex’s is too high to repeat it for each network.

1 Like
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I’ve been considering plans for:

  • Linea
  • Optimism
  • Arbitrum
  • Base

I’ve been studying the veDEXs, since Velodrome launched.

The protocols that bought in early on those managed to build up their treasuries significantly, due to their veNFTs going up in value with the usage of the market, as well as participating in early ecosystem incentive programs.

Linea, in particular, is interesting, because as part of our agreement for deploying there we are receiving a partnership which drives supply-side liquidity, as well as a commitment for veDEX voting. This means that we will be paid, to build COMP LP on Linea.

Compound also has some other areas of advantage in these veDEX games:

  1. Client Lists:

Alpha Growth provides active BD services, and each of these veDEXs comes with a list of potential clients who would benefit from either collaborating with Compound, or using Compound as a service to help deepen their own POL.

You can see here, which protocols are invested in veAERO, as well as their associated treasuries with POL.

This means that each of these treasuries is essentially its own Hedge Fund, because they have locked exposure to AERO, as a part of their portfolio. They have aligned themselves to accumulate more veAERO voting power, and have subjected themselves to the downside volatility of AERO, due to their locked position.

Compound’s AERO market on Base, is perfect for creating Structured Products to build AERO positions via farming, or to hedge against the downside of veAERO.

That means that the entire leaderboard, are potential clients of Compound.

  1. We can earn veAERO, as fees for structured products.

Compound can take a small fee as a part of our Treasury Management Structured Product Services. Which means the expense of that liquidity becomes deeply subsidized for each chain.

  1. Yield on Comp.

We also don’t have to have deep liquidity on these L2s – all we need them for is to provide COMP whales with yield farming incentives. We didn’t have to pay directly for these incentives, since the protocol accrued them as fees.

  1. Leveraged Structured Yield Farming Vaults

The last advantage is the fact that we have control of what assets get listed as Collateral on each of these markets – and this gets into COMP Everywhere.

The fact that you can deposit COMP, and borrow:

  • ETH
  • USDC
  • AERO
  • DOLA – If we create a DOLA market for Base or Optimism.

Means that COMP whales can get the assets they need to earn yield via LP farming just by depositing COMP as collateral.

When combined with the accrual of veDEX assets, and expanding on current partnerships:

  • COMP - DOLA LP

You can get situations where both Compound, and Inverse Finance can be voting to direct incentives to the COMP - DOLA LP Pool, and both treasuries benefit from providing liquidity and farming that pool.

The depth of liquidity on Base, and Optimism, and Linea, are byproducts at that point.

.:.

We can accomplish this in 2025, if Compound DAO passes COMP Everywhere, and decides on a bridging solution.

1 Like
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I support Base given it’s recent popularity and Op because it’s decently sized. Arb and Linea I trust your opinion. It does seem like you’ve done your research and if there is little code needed to add support I am down to add those networks. The only clause being I’m hesitant to issue lots of Comp to grow liquidity/customer bases on those networks. Could we instead just guarantee a floor price for Comp like 70% of it’s current value and use the Compound USDC treasury to back it? Given it’s just sitting there it seems cheaper to just use it then airdrop COMP to create liquidity on networks. If any market got big such that $1-2 mil isn’t enough then we could consider adding liquidity incentives?

To add, it does seem like Comp is missing the boat by not having perpetuals or betting ala polymarket.

1 Like
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Listing COMP as collateral on all markets, and then having liquidations absorbed by reserves would effectively be a floor price, set at XX% of its value at the time of liquidation. The backing would be in market reserves, which would be replenished through fees and liquidations on other assets. This would allow us to list COMP on all markets without needing deep liquidity to process liquidations on all chains.

.:.

The LP Strategies mentioned above, are to provide yield on COMP, and increase TVL in the protocol.

Aerodrome works like a liquidity cooperative, where protocols buy, and lock the AERO token so they can direct AERO emissions to their own pairs.

We’ll use Inverse Finance as an example:

Inverse Finance currently has $13M in veAERO. They use that to direct $AERO emissions to their pools.

COMP - DOLA LP earns AERO for yield farming.

Compound can use this AERO in a few ways:

  1. AERO can be sold, and used to buy COMP, creating Yield, or building LP.
  2. AERO can be added to the supply side of the AERO Market on Base.
  3. AERO can be locked, and then votes can be made to further support AERO emissions toward COMP - DOLA LP.

.:.

If Compound were to launch a DOLA market on Base, with COMP listed as collateral, then we could partner with Inverse Finance.

If Inverse Finance offers to incentivize the COMP - DOLA LP with a portion of their voting power, we could set up a vault, specifically for the Inverse Finance & Compound Treasuries to participate in, which automatically builds up POL and Votes for that pool each week.

We would not need to incentivize this with COMP, because the incentives come from Aerodrome, and the LP Yield Farming – bootstrapped by the veAERO votes from Inverse Finance, and supported by ongoing votes from vault yield.

This is one way that Compound can build up its own veAERO vote, through partnerships.

.:.

Re: Perps
You can trade or hedge COMP on hyperliquid.

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Who would pay for the COMP liquidity? the treasury? I assume listing COMP on a new chain would mean there would need to be DEX liquidity somewhere on chain for liquidations

it would be nice to have Comp as collateral, though I do agree with that

perhaps a liquidity mining program or DEX incentives would be enough to drive decent tvl growth

2 Likes
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Compound DAO has a lot of COMP, and it’s sitting idle.

If we have COMP Everywhere, and a Bridging Solution in place, we can approach Inverse Finance to make a deal about a COMP - DOLA LP.

This LP already exists, and Inverse Finance already is the 3rd place, top holder of veAERO.

If we can come to an agreement, then we could deploy a DOLA market, with COMP listed as collateral.

  • Inverse Finance seeds the liquidity for the market.
  • Compound Treasury borrows against it to deposit into the COMP - DOLA LP.
  • And Inverse Finance votes to direct DEX Incentives [AERO] to that COMP - DOLA LP.

We have a new market, with TVL from two treasuries, and we are building liquidity on Base for COMP, and earning AERO yield from the position.

If Inverse Finance wants to join in the LP pool, then they can do that as well, and we can share the LP Rewards, and make the pool deeper.

Any non-treasury participants are welcome, but not necessary.

.:.

The Compound Treasury would be earning AERO yield above the cost of borrowing the DOLA.

  • We could make our own veAERO position, and auto-vote for our pool.
  • We could sell the AERO to build COMP - DOLA LP, like an auto-compounder.
  • We could deposit the AERO as supply-side liquidity into the Compound AERO Market.

All from a campaign with Inverse Finance, and Idle COMP.

.:.

As far as DEX liquidity for onchain liquidations, the COMP Everywhere proposal suggests that we use market reserves for COMP liquidations on all markets.

But, as DEX liquidity grows, we could increase supply caps, and use DEX liquidity more.