Proposal Title: Compound Yield Routing Platform (CYRP)

Overview

The Compound Yield Routing Platform (CYRP) introduces an innovative solution for automating and delegating Compound V3 yield earnings to other Ethereum addresses or causes (e.g., charities, DAOs, or personal savings goals). This platform leverages advanced infrastructure to enhance Compound’s utility, attract a broader user base, and drive increased activity within the ecosystem.

Problem Statement

Currently, Compound users earn yield directly on their deposited assets. However, there is no native mechanism to automate or redirect these earnings, limiting users who want to:

  1. Support public goods, charities, or social causes.
  2. Automate financial planning by directing yield to savings or investment goals.
  3. Enhance DAO treasury operations by routing yield directly to shared wallets.

This lack of automation and flexibility reduces the platform’s appeal to a diverse range of users seeking customized yield management options.

Proposed Solution

CYRP is designed to solve this gap by offering:

  1. Automated Yield Allocation: Users can route yield earnings to multiple Ethereum addresses with customizable rules.
  2. Advanced Ruleset Implementation: Allow yield distribution:
  • After achieving specific thresholds.
  • In predefined proportions across multiple recipients (e.g., 70% to a DAO, 30% to a personal wallet).
  1. Composability: Integrate with DeFi platforms like Gitcoin, Uniswap, and DAO treasuries, amplifying the impact of yield allocations.
  2. Analytics and Transparency: An integrated dashboard tracks yield allocations, recipient activity, and user-defined impact metrics.

This solution is powered by ERC-4337 account abstraction, enabling seamless and gas-efficient interactions while maintaining compatibility with Compound’s V3 Comet contracts.

Technical Architecture

  1. Smart Contracts:
  • Core logic to manage yield routing, ensuring secure interaction with Compound V3.
  • Rule engine to support customizable distribution parameters and real-time yield allocation.
  • Compatibility with ERC-4337 for improved account abstraction and user experience.
  1. Frontend Interface:
  • User-friendly web application allowing users to set routing rules, monitor earnings, and track allocations.
  • Wallet integration for effortless interaction, leveraging account abstraction for gas efficiency.
  1. Analytics Backend:
  • Tracks allocation metrics, provides yield insights, and ensures transparency.
  • API endpoints for integration with third-party platforms and dashboards.
  1. Security:
  • Extensive testing to prevent vulnerabilities.
  • Integration of audit requirements to comply with Compound’s security standards.

Impact on Compound Ecosystem

  1. Increased User Activity:
  • CYRP incentivizes more deposits by providing advanced yield customization options.
  • Broadens the protocol’s appeal to individuals and organizations seeking automated solutions.
  1. Enhanced Composability:
  • By integrating with other DeFi platforms, CYRP fosters a more interconnected ecosystem, amplifying the value of Compound yields.
  1. Social and Financial Innovation:
  • Encourages social impact by enabling users to allocate yields to public goods and charities effortlessly.
  • Supports DAOs and organizations by streamlining treasury operations through automated routing.
  1. Protocol Differentiation:
  • Positions Compound as a leading platform offering innovative yield management tools, further cementing its leadership in the DeFi space.

Call for Feedback

We welcome the Compound community’s thoughts and insights on this proposal. In particular, we’re seeking feedback on:

  1. The practicality and utility of CYRP in addressing current ecosystem gaps.
  2. Suggestions for enhancing the technical implementation or extending composability.
  3. Any potential risks or challenges that should be considered during development.

Your input will be instrumental in refining CYRP to ensure it delivers maximum value to the Compound ecosystem. Let us know what you think!

Thank you for putting up this proposal. Will integrating CYRP require any protocol changes? Could you also explain how CYRP plans to obtain users’ rewards?

1 Like

Thank you for engaging with the proposal! Let me address your questions below:

1. Will integrating CYRP require any protocol changes?

No, CYRP does not require any changes to the Compound protocol. The platform is designed to work seamlessly with Compound V3 (Comet) contracts as they are. CYRP leverages the existing ERC-20 token rewards system and integrates via smart contracts that interact with Compound’s public APIs and contract interfaces. This approach ensures that the platform remains entirely composable with Compound’s ecosystem without requiring modifications or governance updates.

Additionally, by utilizing ERC-4337 account abstraction, CYRP enables gas-efficient and user-friendly interactions, abstracting complexities while maintaining compatibility with existing protocol standards. The design philosophy is to remain non-invasive and modular, so it acts as a complementary service rather than altering core functionalities of Compound.


2. How does CYRP plan to obtain users’ rewards?

CYRP operates by connecting directly to the user’s wallet and interacting with Compound’s existing reward distribution mechanisms. Here’s how it works in practice:

  1. Claim Functionality:
  • Users’ yield rewards are distributed in the form of accrued interest from their deposits in Compound.
  • CYRP integrates with the Comet smart contracts to track accrued rewards and trigger a claim operation on behalf of the user.
  1. Delegation Smart Contract:
  • When a user sets up CYRP, they approve a Yield Delegation Smart Contract to manage their claimable rewards.
  • This smart contract ensures users retain full control over their principal and allows them to define routing rules for their earned yield (e.g., percentages to specific wallets).
  1. Automated Claim and Allocation:
  • CYRP periodically checks for claimable rewards using Compound’s public interfaces.
  • Once rewards are available, the platform automatically claims and distributes them based on user-defined rules. For example, a user could route 70% of their yield to a DAO wallet and 30% to a personal savings address.
  1. Security and Transparency:
  • At no point does CYRP take custody of the user’s funds. The routing contracts are non-custodial, ensuring users maintain ownership of their assets and rewards.
  • The entire process is fully transparent and verifiable on-chain, with analytics dashboards providing insights into allocation and activity.