0

Why do some lending protocols prefer rebasing tokens (Compound V3, Aave) over accumulating tokens (Spark, Compound V2)?

Rebasing lacks composability. You can't really use them across different protocols.

What is the rationale behind them?

1 Answer 1

1

They optimize for U2S (user to smart contract) instead of S2S (smart contract to smart contract).

The rebasing model makes it easier to see at a glance how much interest you earned. It doesn't require you to go to some UI that knows how the exchange rate evolves.

This explanation has been confirmed by Compound co-founder Geoffrey Hayes here.

P.S. this question has been previously asked by Shubham Yadav on Twitter - see this post.

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service and acknowledge you have read our privacy policy.

Not the answer you're looking for? Browse other questions tagged or ask your own question.