The Compound Gateway for Cross-Chain Collateral and Interest

22 Jul. 2021

Compound Gateway

Back in one of our previous blogs, we learnt about Compound Finance, a DeFi platform that allows crypto users to indulge in crypto trading, crypto lending and yield farming. Blockchain Bridges and networks like Polkadot did enable peer-to-peer value and liquidity transfers from one chain to another, meaning that the chains were built on a similar Blockchain platform.

Not very long ago, Compound introduced the Gateway testnet in December 2020 that enables cross chain transfers. Cross chain transfers means borrowing assets from one blockchain with using collateral from another blockchain.

Let us learn more about the Gateway protocol in this blog today.

What is Gateway and how does it work?

-Built on Ethereum, Gateway, by Compound Finance, is a ledger that facilitates cross chain transfers.

-Gateway is built on the Substrate blockchain, a complete modern framework integrated with the BFT consensus algorithm, and known for its high performance and forkless upgrades.

-Gateway acts as an intermediary between two different blockchain networks to establish cross chain compatibility.

-Gateway makes the process of asset interchangeability easy by providing a platform to investors who wish to buy assets from one chain but have collateral on the other.

-CASH is Gateway’s native token that is used to pay interest for assets and collaterals. CASH token owners earn interest on the number of tokens they hold. CASH is supported currently on Gateway and also on Ethereum via an ERC-20 token.

-Gateway’s network is operated and maintained by the validators, borrowers and off-chain workers. It is the responsibility of the validators to take care of the security of the network. They earn additional interest or CASH tokens in lieu of their responsibilities.

-Investors supplying assets to the Gateway platform earn interest in the form of CASH tokens. Interest is accrued over time by calculating using the CashIndex. On the other hand, borrowers have to pay the interest in CASH.

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Features of Gateway

Features of Gateway

-Gateway offers an easy and simple way to earn and pay interest in CASH - its native unit of account.

-Robust Risk Mitigation - Gateway handles risk in cases of losses very efficiently. Risk is calculated based on the asset volatility.

-Quick and cheap asset transfer to and from Gateway as well as other wallets

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