Decentralized financial credit protocol Compound has introduced a new blockchain that enables cross-chain collateral.
This is the latest step to reduce expensive operations on the Ethereum network and enable better interoperability in the DeFi ecosystem.
The new gateway chain, announced on March 2, has been described as a cross-chain interest rate market that allows users to borrow assets resident in one chain like Ethereum with collateral from another chain like Polkadot or Celo. Compound Finance originally announced the platform in December 2020 when it was called “Compound Chain”.
Compound aims to reduce the current fragmentation in the DeFi industry across different blockchains with Gateway and has chosen the next generation blockchain architecture, Substrates, to do this.
Substrate, which also powers the Polkadot network, is a modular framework that developers can use to create specially designed high-throughput blockchains. The association’s founder, Robert Leshner, explained the platform choice in the blog post:
“We chose substrates to focus on creating application code rather than inventing consensus algorithms. It’s a modern framework based on a modern language, Rust. “
To complement Gateway, Compound plans to build “Starports” that will act as entrances and exits for the new blockchain so that users can borrow or deposit an asset as collateral. Leshner explained that Starports are the “glue” that connects a blockchain to a gateway, and that they can be mixed and matched in different combinations for different networks.
Gateway will also have a native unit of value called CASH, which standardizes value for various different assets and is used to pay transaction fees. CASH is also earned through liquidity provision and network validators.
Gateway is currently running on Ethereum’s Ropsten network as a test network and audits are being conducted prior to the main network launch, although no date has been given for this.
