Update: 3/31/2021
After a lot of community feedback and debate, a number of changes have been made to the proposal since I first posted it.
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Compound Governance is going to be the admin on the contracts. That gives the community the ability to add/remove reporters for each market. Governance will also be the admin on the main oracle contract that controls which markets to support.
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An emergency function will exist for each market that the Compound Community Multisig controls. In the unlikely event that something happens with one of the oracle contracts that requires immediate intervention, the emergency function will switch the price feed to the Chainlink v2 contracts that are widely used in DeFi.
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After a lot of debate and we’re going to continue using Uniswap v2 as an anchor. Once v3 launches, we’ll upgrade the contracts for v3 and send it to governance for approval.
The plan is to publish the revised contracts on testnet in the coming weeks for the community to review. Once feedback has been implemented, we’ll send the contracts for audit. After the audit, we’ll move towards governance.
High level: The oracles that Aave, Sythentix, and others use are Chainlink v2. Those have an admin multisig that Chainlink and other stakeholders control. The system we’re developing is purpose-built for Compound. The community controls admin permissions, emergency functionality, anchor specifications, reporters per-market, and who the reporters are. We are essentially swapping Open Oracle/Coinbase for a community-designed version of Chainlink and maintaining the Uniswap anchor.