@rleshner- the benefit to $COMP holders is diversification beyond the 2 assets that drive the overwhelming majority of Compound usage today, as well as significant increased usage of the platform, something that, right now, our stablecoins are the assets most likely to provide.
Compound is one of the DeFi projects that I personally am most excited about. It’s got great technology, great design, and a widely respected token model. I think it’s going to be successful long-term, but to get there, it’s going to need to have more than 2 assets with significant usage. Let’s look at the numbers. Compound today lists 9 assets:
These are 5 of Compound’s 9 assets, and their total borrow, combined, is only 17.4mm. This constitutes about 1.8% of Compound’s total borrow. Their supply interest rates range from 0.00% to a low 1.11%.
The next two assets have a little more usage, together totaling 48.6mm in total borrow. This is about 5% of Compound’s total borrow.
These two assets (both stablecoins) make up 93% of Compound’s total borrow. It’s a significant risk to the platform to have only two assets making up such a large percentage of total borrow.
Because 7/9 assets on Compound, a platform for lending and borrowing crypto, have limited demand today for lending or borrowing, just two assets make up 93% of Compound’s total borrow (as well as 69% of its total supply).
Just to be clear, that means that all 7 other assets listed on Compound, all combined, make up <7% of the total borrow.
Given that both of the highly-demanded assets are stablecoins, the hypothesis I’d propose is that, by
far, what people are interested in lending and borrowing, today, are stablecoins.
Could this just be an anomaly because users are borrowing and lending Dai to farm $COMP? Unlikely, given that AAVE also has 92% of its total borrow from stablecoins, even though it lists different products.
But unlike Compound, their usage is more diversified: their top two assets only constitute 58.6% of their total borrow, and we’re working with them to list additional non-USD stablecoins that can diversify their platform further.
Looking at the usage data from both lending platforms suggests that while not all stablecoins make big markets, all big markets, today, are stablecoins.
How this collaboration can benefit $COMP holders
We’re an issuer that’s bringing to the table 5 highly trustworthy stablecoins, both USD and non-USD. If the Compound community is interested in diversifying and creating new markets that get significant usage, we think these products are the best bet. There isn’t any other partner where you can get this potential for growth and diversification, while only taking on the risk of a single issuer.
Right now, Compound’s listings don’t correspond to what people (and smart contracts) actually want to lend and borrow: stablecoins. For example, while Augur, WBTC, and BAT are excellent projects, it’s no surprise that they receive tepid usage on Compound given how much usage they get elsewhere. As a comparable, these three products are all also listed on AAVE and, all combined, make up <1% of AAVE’s total borrow. Compound’s situation could be radically different but that’s not what the data suggests.
When it comes to stablecoins, TrueCurrencies meet or exceed the level of trust of existing stablecoins on the platform.
- Based on DeFi Score, TUSD on AAVE has the highest trust rating of any fiat-backed stablecoin currently listed on the platform, higher than DAI, USDC, and USDT, all of which are already listed on Compound. Why?
- TrueCurrencies are the only stablecoins with 24/7 live audits to prove each TrueCurrency is always fully backed. These audits are facilitated by top accounting firm Armanino, LLP.
- We’re now working with oracles to become the only stablecoins to live report collateralization on-chain.
- Unlike some other stablecoins, purchasing and redeeming TrueCurrencies is easy. Just go here.
We think this is a natural partnership and are very ready to invest in making it successful for both projects. Thank you for engaging with us, we’re looking forward to hearing your thoughts on this.