Rationale for using ETH as the unit of account for oracle pricing data

Question

These are Compound Finance's former oracle contracts:

• PriceOracle
• PriceOracleProxy

I say "former" because Compound switched to the Open Price Feed UniwapAnchoredView.sol oracle on Aug 17, 2020.

While studying this function:

function getUnderlyingPrice(CToken cToken) public view returns (uint) {
    address cTokenAddress = address(cToken);
    (bool isListed, ) = comptroller.markets(cTokenAddress);

    if (!isListed) {
        // not listed, worthless
        return 0;
    } else if (cTokenAddress == cEtherAddress) {
        // ether always worth 1
        return 1e18;
    } else if (cTokenAddress == cUsdcAddress) {
        // read from hand picked key
        return v1PriceOracle.assetPrices(usdcOracleKey);
    } else {
        // read from v1 oracle
        address underlying = CErc20(cTokenAddress).underlying();
        return v1PriceOracle.assetPrices(underlying);
    }
}

I started to wonder why did they choose ETH as the base unit of price reference? Their web interface tracks all values in USD.

What advantages are there in using ETH instead of USD?

Answer 1

I'm only speculating here, but...

One might ask a counter-question: why would anyone use USD as a reference price? USD has nothing to do with blockchain while Eth is a native asset in the blockchain. So in my opinion it makes more sense to use Eth. Also, the conversions between tokens are Eth are also more fluent and can be performed on-chain.

I guess it's also a bit of a industry standard. I think Aave uses Eth (search for 'wei' in https://docs.aave.com/developers/developing-on-aave/the-protocol/atokens), and I think Chainlink also gave prices in weis but can't really find a reference for that now so can't be sure.