Decentralized lending protocol Compound announced the official launch of Compound III via Twitter earlier today. Following approval by COMP governance proposal, this major upgrade introduces enhanced cross-chain compatibility, capital efficiency, and user experience while fundamentally restructuring its risk model.
Key Innovations in Compound III
According to founder Robert Leshner, the protocol now features:
- Single-Borrow-Asset Model: Each deployment designates one borrowable asset (initially USDC on Ethereum), eliminating the previous "mixed-risk model" where collateral was continuously restaked across multiple assets.
"Your collateral remains your property—only accessible during liquidations," Leshner emphasized. - EVM-Chain Agnostic Design: Native support for all Ethereum Virtual Machine-compatible networks with plans for multi-chain expansion.
- Collateral Options: ETH, LINK, COMP, UNI, and WBTC accepted as collateral—with more assets to follow.
Additional upgrades include:
✅ Redesigned liquidation engine for improved borrower safety
✅ Asset-specific exposure limits to mitigate systemic risks
✅ Independent interest rate models governed by COMP token holders
✅ Advanced account management tools for dApp integrations
✅ Exclusive Chainlink oracle feeds for accurate price data
Market Impact: Early Adoption Metrics
Within 24 hours of launch, Compound III recorded:
- $1.03M in total collateral locked
- 56,000 USDC borrowed
- COMP dominating collateral deposits (99%+)
👉 Explore DeFi lending strategies with Compound V3
COMP Token Price Volatility
The protocol's native token COMP briefly surged 7% to $54.56 post-announcement before retracing to $51.14 amid profit-taking. Analysts attribute the pullback to:
- Short-term trader activity
- Awaiting sustained usage metrics
FAQ: Compound III Explained
Q: How does Compound III improve capital efficiency?
A: By isolating collateral from cross-asset exposure, users borrow more against deposited assets while reducing liquidation risks.
Q: Can I earn interest on collateral in V3?
No—collateral no longer generates yield but enables higher borrowing power and lower gas fees.
Q: Which chains will support Compound III next?
The EVM-compatible design allows rapid deployment across networks like Arbitrum and Polygon.
👉 Master decentralized finance with Compound's latest upgrade
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