The arrival of Compound's new Gateway chain has many wondering if the protocol could soon become a Polkadot parachain. Gateway, which enables application developers to build on every base layer rather than being confined to Ethereum, is described as an "open, distributed ledger for cross-chain interest rate markets."
In common with Polkadot, Gateway is a Substrate-based blockchain that benefits from the framework’s hot-swappable consensus layer and flexible runtime library. Compound’s Gateway was first touted last December, though it carried the name Compound Chain at the time.
Gateway to a Bright Future
Pitched as a blockchain capable of transferring value and liquidity between peer ledgers, Gateway was designed to complement Ethereum contracts and be governed by COMP token-holders, whose responsibility it is to appoint validators.
According to a Medium post announcing Gateway’s arrival on Ethereum’s Ropsten testnet, Compound chose Substrate so that it could "focus on building application code instead of inventing consensus algorithms," calling it a "modern framework built on a modern language, Rust."
Compound hopes that the application-specific blockchain will enable the money maker to scale in the years ahead. There is no indication at this time when Gateway will see a mainnet launch.
The newly-launched blockchain will allow users to earn dollar interest from staking CASH, a debt-backed stablecoin that is the platform’s native unit of account. They can also quickly and cheaply send any crypto in Gateway to other users, including wallets native to other blockchains.
Compound’s Parachain Prospects
Although all Substrate-based chains are candidates to become coveted Polkadot parachains, it’s all just speculation at this point in time. The Polkadot platform supports a limited number of parachains, estimated to be around 100. Parachains are independent blockchains with their own economies, native tokens and consensus models, which connect to Polkadot’s central Relay Chain.
The upcoming Polkadot parachain auctions will enable Polkadot to connect with established rivals like Bitcoin and Ethereum for the first time, with data transference enabled by a mechanism known as cross-chain message passing-lite. Permissionless auctions will see bids made using DOT tokens and parachains 'leased' for a defined time-period.
Parachain slots are hot commodities at the moment, with speculation rife as to which projects become part of Polkadot’s ecosystem. Celebrated for its high throughput, security and scalable, interoperable architecture, Polkadot was recently a top five cryptocurrency by market cap though Tether (USDT) has now pushed it into sixth place.
Some parachain candidates have already launched on Kusama, Polkadot’s dedicated canary network. Developers can also use parachain testnet Rococo to register a Substrate-based chain as a parachain and message the Relay Chain. After the maiden auction on Polkadot, subsequent auctions will occur on a fortnightly basis until the slots are filled.
Compound, of course, is an established player in crypto, and its algorithmic interest rate protocol is widely used. At present, over $3 billion of assets earn interest within Compound, thereby providing liquidity to borrowers. The Substrate connection of its Gateway chain suggests that Compound could secure a slot when the auctions get underway.