After months of development, Woof is excited to announce three new features that will dramatically improve user experience and generate new revenue streams for the DAO.
Motivation
While Compound offers excellent lending and borrowing mechanics, users currently face significant friction when performing common financial operations:
- Increasing leverage for LST looping strategies requires multiple manual steps
- Exiting debt positions means sourcing external assets and executing complex transaction sequences
- Switching collateral types forces users to completely unwind and rebuild their positions
These limitations not only frustrate users but also push volume to competing protocols that offer more streamlined experiences.
Additionally, these features create revenue opportunities for the DAO. Since all three features utilize swaps under the hood, they generate protocol fees on every transaction, turning user convenience into sustainable DAO revenue.
Monetization
Implement an interface swap fee from day one that flows directly to a DAO-controlled address, beginning immediate revenue generation.
The suggested interface swap fee is 25 bps.
Revenue Model
Here’s what annual DAO revenue could look like at 100% fee capture, across different monthly volumes and fee rates:
| Monthly Volume | Monthly Fees | Annual Fees |
|---|---|---|
| $10M | $25,000 | $300,000 |
| $25M | $62,500 | $750,000 |
| $50M | $125,000 | $1,500,000 |
| $100M | $250,000 | $3,000,000 |
Feature Overview
Let’s dive into each feature, how it works, and why it matters.
1. Multiplier Mode (Leveraged Collateral Supply)
**What It Does:** Multiplier Mode allows users to increase their supplied collateral using borrowed funds in a single transaction.How It Works:
- User supplies initial collateral (e.g., $10 worth of wstETH)
- The smart contract uses a flash loan to borrow the base asset (e.g., $20 worth of WETH)
- Borrowed funds are swapped into the target collateral asset
- Total collateral is supplied to Compound (now $30 worth of wstETH)
- A borrow position is opened for the base asset ($20 WETH debt)
- Flash loan is repaid, and the user’s leveraged position is established
Benefits:
- One-click leverage for yield strategies
- Maximize returns on incentivized collateral assets
- Capital efficient - no need to manually loop positions
- Gas savings compared to manual multi-step processes
- Perfect for LST/LRT looping strategies
2. Collateral Repayment (Repay Debt with Collateral)
**What It Does:** Enables users to repay their debt directly using supplied collateral, eliminating the need to source the base asset externally. This is especially powerful for exiting positions quickly and efficiently.Current Pain Point: Today, exiting a Compound position requires:
- Sourcing the base asset externally (USDC, WETH, etc.)
- Repaying the outstanding debt
- Withdrawing supplied collateral
- Swapping collateral back to base asset (if needed)
This multi-step process is gas-intensive, exposes users to market risk during execution, and creates unnecessary friction.
How It Works:
- Flash loan of the base asset is taken
- Loan is repaid using the flash-loaned funds
- Collateral is withdrawn from Compound
- Collateral is swapped to the base asset
- Flash loan is repaid
All of this happens atomically in a single transaction.
Example Use Case: User has $1,000 worth of WBTC collateral and $500 USDC debt. Instead of buying USDC to repay:
- Contract takes a $500 USDC flash loan
- Flash-loaned USDC repays the debt position
- $500 worth of WBTC collateral is withdrawn
- WBTC is swapped to USDC
- Flash loan is repaid with the swapped USDC
- User keeps remaining WBTC collateral
Benefits:
- One-click exit from debt positions
- No need to hold or source the base asset
- Minimizes gas costs and transaction count
- Perfect for automated tools and position managers
- Especially valuable for users who want to exit Multiplier positions
3. Collateral Swap
What It Does: Allows users to swap one form of collateral for another without closing their borrow position. This enables active portfolio management and rebalancing while maintaining loan position.
Current Pain Point: To switch collateral types today, users must:
- Source the base asset externally
- Repay outstanding debt
- Withdraw and swap original collateral
- Supply new collateral
- Re-borrow the base asset
This is extremely gas-intensive, slow, and risky during volatile markets.
How It Works:
- User selects new collateral asset to rotate into
- Flash loan sources the new collateral temporarily
- New collateral is supplied to Compound
- Old collateral is withdrawn
- Old collateral is swapped for the new collateral asset
- Flash loan is repaid
- Borrow position remains unchanged throughout
Example Use Case: User has wstETH collateral with a USDC borrow. They want to rotate into WBTC while keeping the USDC debt open:
- Select WBTC as new collateral
- Contract flash loans WBTC and supplies it
- wstETH is withdrawn and swapped to WBTC
- Flash loan repaid
- User now has WBTC collateral with same USDC debt
Benefits:
- Rebalance collateral without unwinding positions
- Maintain borrow state throughout the swap
- React to market conditions efficiently
- Reduce risk of user error
- Enable sophisticated portfolio management strategies
- Unlock composability for vaults and automated tools
Technical Architecture
All three features share a common technical foundation:
Smart Contract Layer:
- Modular adapter contracts that interface with Comet
- Flash loan integration includes: Morpho, Euler, Balancer, Aave and Uniswap
- DEX aggregator routing via OKX Aggregator
- Slippage protection and input validation
- Extensive test coverage and security reviews
Performance Optimization:
- Backend system that dynamically selects the best flash loan provider for each transaction, minimizing costs and making flash loans as close to free as possible for users
- OKX Aggregator integration to provide optimal swap routes and minimize slippage across all DEX liquidity sources
- A few tokens won’t be supported due to lack of on-chain liquidity
Integration:
- Zero changes to core Comet contracts required
- Full compatibility with existing Compound V3 markets
- Seamless integration with current Compound UI/UX
- Positions remain standard and visible in all Compound interfaces
Security:
- Code reviewed by SSP
- Slippage protection on all swaps
- Non-upgradeable
What Happens Next?
Immediate Next Steps:
- Foundation Coordination: We’re working closely with the Foundation team to finalize the deployment process and ensure a smooth rollout for users
- Community Validation: We need your help! Activity on this thread demonstrates demand and helps prioritize launch timing
- Feedback Collection: We’ve worked hard to integrate these features seamlessly into the existing UI, but we want your input on flows, edge cases, and improvements
Future Development:
- Native LST/LRT Adapters: If these features gain traction, we plan to develop native adapters for liquid staking tokens that eliminate swap fees where possible (e.g., direct ETH <> wstETH wrapping via Lido)
How You Can Help
1. Show Support If you find these features valuable and would use them, please engage with this thread. Community interest helps demonstrate the value proposition and accelerate deployment.
2. Share Use Cases Tell us how you’d use these features:
- What strategies would you implement?
- Which feature is most valuable to you?
- What collateral pairs would you swap between?
3. Provide Feedback We believe we’ve designed the optimal user flows, but we want your input:
- Are there edge cases we should consider?
- Should we adjust any parameters (slippage tolerances, fee structures)?
- How can we make these features even better?
4. Suggest Integrations If you’re building tools, vaults, or protocols on top of Compound:
- Would you integrate these features?
- What additional functionality would make them more useful?
Closing Thoughts
These three features represent a significant leap forward for Compound protocol. They address real user pain points, unlock new strategies, improve capital efficiency, and generate meaningful revenue for the DAO.
We’re incredibly excited to get these tools into users’ hands and see what the community builds with them.