Hey Compound Community, I’m reaching out on behalf of Gyroscope, a project that developed a new type of concentrated liquidity pool.
Gyroscope already supports Aave’s aToken as pool assets and would love to support cTokens as well. To make this happen, we’re suggesting the development of a v3 cToken wrapper that is compatible with the ERC-4626 tokenized vault standard.
Some further stats on Gyroscope: Gyroscope currently has about 35mn USD (as of Jul 25) in TVL across all pools. Gyroscope’s 30d volume can be inspected here.
Background
ERC-4626 sets a standard for tokenized vaults in the Ethereum ecosystem. This standard aims to unify interfaces for yield-bearing vaults, making it easier for developers to integrate with different DeFi protocols and for users to interact with these vaults more seamlessly.
Gyroscope’s use of ERC-4626 compatible cTokens
Gyroscope built an extension of its concentrated liquidity pool, ‘E-CLP’. The extension supports a static form of yield bearing deposit-receipt token. Gyroscope pools are built on top of Balancer infrastructure.
This pool makes use of the knowledge build-up of order routers and lower gas fees, as it relies on order routers to wrap/unwrap pool assets, which allows keeping the smart contract complexity of the AMM at a minimum.
The pool uses Balancer rate providers to update pool asset prices without leaking MEV [rate provider animation / docs].
This has the potential to dramatically improve capital efficiency & leverage ongoing trends of increasing offchain computation by order routers. It allows LPs to combine the yield from lending protocols with swap fee revenue of LPing and, where applicable, external incentives (e.g. BAL or AURA from Balancer ecosystem participants).
A version with aTokens is live in production with the first order routers (e.g. Paraswap) fully picking up the route. A version with cTokens could follow soon. These pools are also growing rapidly with a MoM TVL growth of 345%.
General value of ERC-4626 compatible cTokens
However, we imagine many other protocols to also benefit. Here’s why:
- Interoperability: ERC-4626 compatibility means cTokens could work more smoothly with a variety of DeFi apps and platforms.
- Ease of Integration: Developers would find it easier to include cTokens in their projects, boosting Compound’s adoption and use.
- User Experience: Users get a more standardized and user-friendly interface when dealing with cTokens.
- Innovation: A standardized interface could spark more innovation within the Compound ecosystem, with developers building more advanced and interoperable financial products.
Call to Action
We are proposing that the Compound community or other relevant parties develop or fund the development of an ERC-4626 compatible cToken wrapper for Compound v3.
Gyroscope is eager to hear your thoughts and suggestions. If there’s enough support, we can move forward with a formal governance proposal to allocate the needed resources for this project.
Thanks for your time!
Best,
Jonas
on behalf of Gyroscope