Compound Treasury Launches Institutional Borrowing

Thursday, September 15, 2022

Quick Take

  • Compound launches institutional borrowing.
  • Open Zeppelin publishes a cETH post-mortem.
  • Miners fork Ethereum Proof-of-Work (ETHW).
  • Etherscan explorer now displays Beacon Chain data.

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Compound Launches Institutional Borrowing

Compound Treasury launched institutional borrowing, allowing accredited institutions to borrow USD or USDC at fixed interest rates starting at 6% APR. Institutions can use Bitcoin, Ether, and supported ERC-20 tokens as collateral. Loans are also open-ended, allowing borrowers to repay balances as they see fit.

Liquidity is provided by the Compound protocol, which currently holds $2 billion in TVL. Institutions can also lend USD or USDC in exchange for 4% APY. Compound Treasury is part of Compound Prime, LLC, a subsidiary of Compound Labs that provides cash management solutions for institutions.

Compound cETH Freeze Post-Mortem

Open Zeppelin, the security auditor for Compoud DAO, released a post-mortem on an oracle error in Compound V2. cETH was effectively frozen due to an error caused by a faulty oracle update. Compound later implemented a proposal to reverse the upgrade, which was initially performed to update price feed anchors from Uniswap V2 to V3.

Open Zeppelin discovered that the “getUnderlyingPrice” function was returning empty bytes for cETH and causing contract calls to revert. cETH does not support the underlying function since cETH relies on native Ether whereas other cTokens depend on ERC-20 tokens. Compound is currently working to fix the issue and will re-deploy the upgrade after further testing.

Ribbon Lend Institutional Borrowing

Ribbon Finance revealed Ribbon Lend, a credit market that gives institutions access to unsecured loans. Users can deposit assets into unsecured lending pools to receive up to 10% APY. Similar to Aave, interest rates are based on the utilization of funds in the pool. Lenders can exit their position at any time as long as the pool has liquidity.

Ribbon Lend uses Credora, a private credit oracle, to evaluate the creditworthiness of institutional borrowers. 5% of the interest accrued in each given pool is also redirected to an insurance pool, which will payout lenders in the event of default. Ribbon Finance aims to launch the credit market during the week of September 25th.

Miners Fork Ethereum Proof-of-Work

Miners forked Ethereum to mine their own version of the chain called ETHPoW. The forked chain is being led by prominent Chinese crypto miner Chandler Guo. ETHW, the fork’s native currency, is currently trading at $11, down from a high of $60. OKX and FTX were among the first centralized exchanges to distribute ETHW to users.

Initially, there was fear that ETHPoW would use the same chain ID as Ethereum, which could have led to potential replay attacks. ETHPoW published its chain ID on Thursday morning, revealing it selected a chain ID that was already in use by a Bitcoin Cash testnet.

Etherscan Updated With Beacon Chain Data

Etherscan updated its block explorer to display the finalization status, proposed slot and epoch, fee recipient, and consensus information on mainnet proof-of-stake blocks. An epoch is a representation of 32 slots, in which each slot is posted every 12 seconds. A validator is chosen at random at each slot to propose a block, hence Ethereum now has a throughput of 12 seconds per block.