TempCheck: Compound III Deployment as a GHO Facilitator (GHO as base asset)


As a relatively new participant in the governance ecosystem, I would first like to get my initial idea temperature checked by the Compound Community.

Recently, the Aave Protocol announced their decentralized stablecoin “GHO” (Introducing: GHO - #67 by explorandoahora - Governance - Aave, GHO Development Update - Development - Aave).
GHO introduces the concept of facilitators. Describe as: "A Facilitator (e.g., a protocol or entity) can trustlessly mint and burn GHO tokens"

When evaluating Compound III, having a base asset (such as USDC), the growth of the market is heavily dependent on the supply of the base asset and in certain market conditions could be limiting for the deployment of Compound III. This is where I believe that Compound III could become a GHO Facilitator where GHO would be the base asset.

What benefits do I foresee for Compound III and the community:

  • A Compound III deployment that will not have supply constraints. The only limitation will be the bucket size of the facilitator.
  • The borrowing rate paid by borrowers of GHO will be paid to the Compound DAO/Treasury. (I’m not sure if it has to be split with the Aave DAO. That is not documented anywhere)
  • Instead of potentially defragmenting the stablecoin market further, Compound can support the growth of a fully decentralized stablecoin. Through growing GHO, Compound would benefit in terms of revenue for the DAO.

This idea does not only have to be limited to GHO. There is a possibility that Compound III could become a base vault for DAI, however, that would need to be a new primitive.

By the looks of it, GHO is not live yet but only discussed. I thought I would start this conversation early as it would be to the benefit of Compound to respond/implement a facilitator soon after Aave Protocol does.

I look forward to the communities feedback and discussion around this topic.