Top Crypto Loan Platform Compound to Allow Investors to Select New Stablecoin of Choice
Compound is a marketplace that helps users borrow and lend cryptocurrency. In an effort to include their investors in the ongoing progress of their platform, they are asking their opinion on a new stablecoin to list on the platform. The voting for the stablecoin is open until November 6th, which also happens to be election day for the US.
The money market launched in September, creating an opportunity for investors to earn more money by lending out their crypto, much in the same way that someone would rent out their home. However, they also act as the middleman for borrowing on their marketplace. By centralizing these services in one place, shorting a currency becomes easier, which makes the price fall. Right now, the ecosystem supports ether, augur, basic attention token, and Ox.
CEO Robert Leshner spoke with The Block about their process, saying,
“Our protocol, which is entirely smart contracts, lets anyone borrow assets or earn an interest rate.”
So far, the marketplace has lent out $5.2 million worth of crypto, and growth has remained strong. However, after hearing from users that they want more ways to invest, Compound listened. The message has clearly been the desire to include a stable coin in their loans.
“People want to earn interest on what looks like a dollar, instead of a more volatile asset. He added, “It’s easier to add leverage or go long if you’re borrowing [what amounts to a dollar], instead of ether.”
However, Compound wants to continue the track record of listening to their customers. They are not choosing the stablecoin on their own, and instead want their customers to make the decision. The poll has been ongoing, and dai is presently in the leading position. One third of the votes have been on the side of USD coin. None of the others are fairing very well, but Gemini Dollar, TrueUSD, and Paxos are the other stablecoins in the running.
To reduce the risk of double voting, there is an anti-gaming mechanism that requires the user to input their Ethereum address that has used Compound before. This has not exactly been met with a positive reaction, but it reduces the risk of manipulation.
When the winner is determined, the stablecoin will be listed on the marketplace within about two weeks of the end of the vote. An audit will take place before the token is listed, and users will have access to disclosures that will explain the risks and other details. The interest should be about the same as what is paid for US Dollars. However, the actual interest will not be determined until the listing happens. Leshner said,
“We’ll start to test some basic economic principles.”
Some investors and enthusiasts were curious about why Tether was not a part of the listing. However, there has been a lot of controversy about the stablecoin lately as the price fell below the dollar. Luckily for them, their price has started to normalize, but it has not been enough for Tether to be a part of the competition. On the listed stablecoins, Leshner said,
“We’re allowing the community to vote on assets which we deem to be above a reasonable standard. Tether does not meet a reasonable standard of transparency to allow community to vote on it.”