Compound’s New Blockchain Readies DeFi for Central Bank Digital Currencies

Compound Labs released a white paper Thursday detailing its plans to create Compound Chain, an application-specific blockchain that can provide money market services across multiple networks.

“We want to announce the designs for a blockchain that can scale Compound over the next century,” Compound founder Robert Leshner told CoinDesk on a phone call. The decentralized finance (DeFi) firm isn’t committing to a timeline yet but it is at work on a testnet now.

The new white paper, a draft of which was shared with CoinDesk in advance, authored by Leshner and Compound Labs staffers Geoffrey Hayes, Jared Flatow and Max Wolff, cites three limitations of the current version of Compound on Ethereum: gas costs, inability to serve assets on other chains and the fact that all supported assets aggregate the risk of each supported asset.

Those new supported assets aren’t envisioned to be limited to blockchains of the trustless, permissionless variety either. The new project is meant to support the forthcoming and rumored digital assets from central banks and investment banks.

The white paper states: 

"Compound Chain is a reimagination of the Compound Protocol as a stand-alone distributed ledger, capable of solving these limitations and proactively preparing for the rapid adoption & growth of digital assets on a variety of new blockchains, including Eth2 and central bank digital currency ledgers."