Compound Dai (CDAI)

What Is Compound Dai (CDAI)?

Compound Dai is an algorithmic, autonomous interest protocol created for developers to unlock a range of open finance applications. The Compound is described as a protocol on the Ethereum blockchain that builds asset bundles based on the supply and demand of assets, which are pools of assets with algorithmically derived yield rates. Suppliers (and borrowers) of assets interact directly with the protocol to earn (and pay) variable rates without negotiating maturities, rates, or collateral with peers or counterparties.

Unlike exchanges or peer-to-peer platforms, where a user's assets are matched and lent to another user, the Compound protocol aggregates each user's supply; it becomes a fungible resource when a user provides an asset. Compound allows users to borrow from the protocol frictionlessly using tokens as collateral for use anywhere in the Ethereum ecosystem. Unlike peer-to-peer protocols, borrowing Compound requires the user to only specify the desired asset; there are no negotiated terms, maturity dates, or funding periods; borrowing is instant and predictable.

Compound starts with centralized control of the protocol, and it aims to transition over time to full community and stakeholder control. The administrator controls the following permissions in the protocol:

• Ability to list on the new cToken market;

• Ability to update yield rate models for each market;

• Ability to update oracle addresses;

• Ability to withdraw cToken reserves;

• Ability to choose the new administrator, such as a DAO controlled by the community. DAO can choose a new administrator by itself, and the administrator has the ability to evolve time-based on stakeholder decisions. The yield rate is determined by the supply and demand of the underlying asset; when demand for the borrowed asset increases or supply is removed, the yield rate increases, incentivizing additional liquidity. Users can contribute tokens to earn yield without trusting a central party. Users can borrow tokens (to use, trade, or re-lend) by using the balance in the protocol as collateral.

History of Compound DAI (CDAI):

Robert Leshner founded the Compound Finance platform. The first version of the whitepaper of CDAI was released in February 2019.