Deploy Compound V3 on Mode

Deploy Compound V3 on Mode

Preamble

  • Type: Multichain Deployment
  • Title: Deploy Compound III on Mode
  • Authors: @Deez from the Mode Team (The Mode team consulted the Compound Growth Program when drafting this proposal)

Proposal Introduction

Point of Contact (POC): @Deez

Overview of Proposal

After discussions with various stakeholders and community members, Mode has identified the deployment of Compound on Mode as a pivotal development. Conversations with members from the Compound community have reinforced our decision to pursue this expansion. Given these alignments, we propose deploying Compound V3 on the Mode Mainnet.

Motivation

Mode is a Layer 2 solution on the OP Superchain, crafted to bolster the network’s capacity and throughput while significantly cutting transaction costs. Mode operates on a modular optimistic rollup mechanism, ensuring execution of smart contracts and transactions off the main Ethereum blockchain (Layer 1) with unwavering security and decentralization. This approach assumes transactions are valid by default, with computations only occurring in disputes, thus enhancing throughput and efficiency. Mode is fully EVM Compatible, aligning with Compound’s technical requirements for new chain deployments. Furthermore, Mode introduces unique developer incentives that are well-suited for supporting projects that contribute to public goods.

Launching Compound on Mode Mainnet is a strategic maneuver to leverage these technological benefits, offering enhanced efficiency, reduced gas costs, and quicker transactions. This integration not only benefits Mode users by introducing them to one of the oldest and most secure DeFi protocols but also underscores Compound’s dedication to scalability and cost efficiency. It positions Compound advantageously within the competitive L2 DeFi landscape, paving the way for future growth and innovation on a forward-thinking platform.

Grant Application

A developer team planned to apply to Grants for this deployment, but L2 deployment was excluded from the scope of the Compound Grants program. As a result, the Compound Growth Program will activate its own developer fund to finance this integration.

Non-Technical Evaluation

Statistics recorded on May 22nd, 2024:

  • TVL on the Chain: $744M
  • Number of protocols on the chain: 41+
  • Number of unique addresses on the chain: 476,329

Rationale

Mode is rapidly emerging as a top Layer 2 platform, demonstrating significant activity and liquidity, especially in the LRT and synthetic BTC sectors. Moreover, Mode’s approach to promoting novel and useful yield opportunities and developer incentives provide a fertile ground for promoting activity on Compound V3. This includes several incentive cycles and potential partner integration opportunities via Mode’s Yield Accelerator that Compound can leverage.

Proposed Markets

  • Native USDC

Collateral Assets

  • m-BTC
  • wBTC
  • MODE
  • ETH
  • modeETH (powered by sfrxETH) (when supported)

Security Considerations

Some risks to consider include:

  • Mode’s sequencer is currently centralized, with plans for shared sequencing as part of the Superchain in the future. Despite this, a core security objective of Mode is ensuring that the Sequencer cannot prevent users from submitting transactions to the L2 chain. Users can always bypass the sequencer and include transactions directly via the ModePortal contract on L1.
  • The fault proof system is live on Mode Goerli, at Stage 0 of fault proofs. Stage 0 means L2 state roots are posted to Ethereum L1, inputs for the state transition function are posted to L1, and a source-available node exists that can recreate the state from L1 data.
  • Further risk analysis is available here: Mode – L2BEAT

Copyright Waiver

Copyright and related rights waived via CC0 2

2 Likes

Gm all, Deez from Mode here :dove:

Wanted to make myself available to answer any questions if needed and express a sincere thanks to the Compound Growth Program for help in putting this proposal together.