Novel integration of cTokens on Base
QiDao has launched a peg stability module (PSM) on Base to mint & redeem stablecoins with cTokens. The first approved token is cUSDbC. Below is a very brief description of this novel integration and its benefits for the Compound community.
For a more in-depth explanation, please see the following article: Notion – The all-in-one workspace for your notes, tasks, wikis, and databases.
Benefits for Compound users
MAI has high yield opportunities on Aerodrome and other partner DEXs on Base. This PSM will allow users to farm these yields while maintaining exposure to cTokens via the redeemability of MAI.
The graphic below illustrates this yield arbitrage:
Benefits to Compound
The PSM extends the yield value of deposits on Compound. While users farm on Aerodrome, for example, their stablecoin deposits stay at Compound.
Sustainability
QiDao’s cost of capital is lower than the return it makes on the PSM. As a result of these unit economics, QiDao can scale rewards on partner DEXs for MAI, bringing an increasing amount of deposits at Compound Base.