Compound Growth
Grow strategically.
Last updated
Grow strategically.
Last updated
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How they work.
Having accepted a deposit, the traditional CDP puts to 'work' a deposited assets. Everything received as rewards are swapped for more of the same deposited asset, before re-depositing the newly converted balance into the same CDP and the process repeats and repeats; into infinitum.
A great tool for focused position building, but not so great for diversification.
3.finance builds on the traditional concept by injecting 'Signals' in between the deposit pool and the external protocol issuing the rewards, adding a layer of optionality and flexibility, delivering profound amplifications to down stream position building strategies.
Here's how it works:
A 'Parent balance' primarily references balances received from a connected wallet. However, the parent balance may also include compound balances that have been migrated from the child.
A 'Child balance' always references the balance accumulated through compound activities.
While parents apply signals to their balances, directing rewards along any compound path of their choosing, children do not. As the system is currently built, children are unable to apply signals to their balances and thus are only able to self compound.
Children receive all rewards earned by their parent & by any parent signalling their deposit asset,
Children can only self compound rewards into the asset their parent holds on deposit.
Therefore:
If the intent is to retain a self compounding balance, retain child balances.
If the intent is to concentrate all rewards into building an alternative CDPs' position, migrating the child balance regularly will maximise rewards being compounded in the targeted CDP.
In other words; while building segregated self compounding balances can be used strategically, migrating balances from a child to its parent mitigates the limitations imposed on rewards received by that child.
'Compound Deposit Pools' or 'CDPs' apply compound paths to their deposits.
By default, the set compound path or 'Signal', returns and compounds rewards in the source CDP. In other words: the default is to self compound.
Depositors may change the compound path by 'Signalling' an alternative destination for the rewards received by the pool holding their deposits. However:
Only CDPs may be selected as alternative destinations.
Signalling an alternative destination results in the rewards earned by the source CDP (A) being sent to the child (b) of the destination CDP (B).
The rewards received by (b) will then self compound until its balance is migrated to its parent (B).
Note.
While the target CDPs' parent (B) has no balance, Signals can not be used until its child (b) balance migrates to the parent (B). At this point, Signals will become available and onward compound paths can be set.
'Liquid Deposit Pools' or 'LDPs' apply liquid paths to their deposits.
LDPs are CDPs without children. Meaning their rewards can not be used to self compound their own native deposits. Rewards received by LDPs are therefore redirected to boost compounding activities of other CDPs.
LDPs are prospect CDPs, upgradable (and downgrade-able) by the community.
While these deposit pools remain in 'Liquid' form, their rewards will be directed to a CDP set by the team and/or community. However, as with CDPs, this destination CDP can be changed on an individual basis to boost any CDP of their choosing.
Here is a list of Products utilised by the Compound Engine:
The following tokens are accepted or issued by the Compound Engine:
Here a few interesting strategies to explore:
Confident more strategies will reveal themselves to us as the product matures, we can't be more excited to see how this evolves through community engagement and imagination.
Learn more about . You can also read our articles on for examples and visuals.
Learn more about our deposit pools .
- a new perspective, a new paradigm of priorities.
- the flexible set and forget compounder.
- composable compounders.
Where emissions received by the CDP are consolidated into the pools native token and redeposited.
Where emissions from one or more CDPs are used to boost the native balance of another CDP.
Where emissions from one or more CDPs and one or more LDPs are used to boost the native balance of another CDP.
Where emissions from a CDP is used to boost the native balance of another CDP and visa versa.
Where emissions from one or more LDPs are used to boost a Looped CDP setup.
