A pleasure that so many at Superfluid appreciated my post, which was unsolicited and truly spontaneous. Keep doing a great job, I will follow your journey. Luca
Thanks for your analysis of Superfluid money, you nailed it on the head.
I especially enjoyed the "abstraction of semantic" part. That resonates the most with me, since it has a lot to do with compressing information to what's necessary for transactions.
Cool project! Is there any fundamental difference between the way superfluid's streams work and the way compound's cTokens' interest rate is calculated (https://compound.finance/docs/ctokens#redeem)?
Thanks Samuel, very different. Compound calculates in continuum an exchange rate, but de facto the owner runs a counterparty risk vs. Compound until the cToken is redeemed. In the case of Superfluid, users of the stream receive value per second, without any counterparty risk - the main risk they are exposed to is technological/ smart contract risk. Although they can receive back their unwrapped token only by redeeming/ burning xTokens, it is a non-fiduciary deposit rather than a swap with a protocol.
I'm still not 100% quite sure I understand the exact difference, so if you were able to explain in terms of solidity primitives that would be super helpful. From my current understanding:
Compound: deposit ETH in a pool -> receive cETH -> after some time burn the cETH to withdraw the ETH + some accrued interest (paid in ETH by converting from cETH's accrued interest value).
Superfluid: deposit ETH in a smart contract -> receive ETHx -> start streaming ETHx to another account -> after some time that account can burn the received ETHx to transfer the equivalent ETH from the transferer's deposited amount.
So the big difference would be that in compound the underlying ETH is pooled together with many other depositors' ETH. If they decide to remove all of their ETH from the pool, your cETH will drop in value and won't be worth a lot? (I don't understand the cETH valuation well enough, but I'm guessing this is what you mean by "counterparty risk vs Compound" right?)
Superfluid, contrary to this, locks each depositor's ETH in an individual smart contract, so that counterparty risk is transfered to a smart contract risk instead, correct? I see a lot of parallels with state channels here (money is locked up in a smart contract and can be streamed off-chain), is that a valid comparison?
Hi Samuel, I think your description makes sense. In general, although the caveat is that I haven’t performed a technical DD to understand the risk bucketing within either Superfluid’s or Compound’s smart contracts!
Thanks for your comment Miao,
A pleasure that so many at Superfluid appreciated my post, which was unsolicited and truly spontaneous. Keep doing a great job, I will follow your journey. Luca
Hi, I am Miao from Superfluid.
Thanks for your analysis of Superfluid money, you nailed it on the head.
I especially enjoyed the "abstraction of semantic" part. That resonates the most with me, since it has a lot to do with compressing information to what's necessary for transactions.
Cool project! Is there any fundamental difference between the way superfluid's streams work and the way compound's cTokens' interest rate is calculated (https://compound.finance/docs/ctokens#redeem)?
Thanks Samuel, very different. Compound calculates in continuum an exchange rate, but de facto the owner runs a counterparty risk vs. Compound until the cToken is redeemed. In the case of Superfluid, users of the stream receive value per second, without any counterparty risk - the main risk they are exposed to is technological/ smart contract risk. Although they can receive back their unwrapped token only by redeeming/ burning xTokens, it is a non-fiduciary deposit rather than a swap with a protocol.
Hi Luca! Thanks for answering :)
I'm still not 100% quite sure I understand the exact difference, so if you were able to explain in terms of solidity primitives that would be super helpful. From my current understanding:
Compound: deposit ETH in a pool -> receive cETH -> after some time burn the cETH to withdraw the ETH + some accrued interest (paid in ETH by converting from cETH's accrued interest value).
Superfluid: deposit ETH in a smart contract -> receive ETHx -> start streaming ETHx to another account -> after some time that account can burn the received ETHx to transfer the equivalent ETH from the transferer's deposited amount.
So the big difference would be that in compound the underlying ETH is pooled together with many other depositors' ETH. If they decide to remove all of their ETH from the pool, your cETH will drop in value and won't be worth a lot? (I don't understand the cETH valuation well enough, but I'm guessing this is what you mean by "counterparty risk vs Compound" right?)
Superfluid, contrary to this, locks each depositor's ETH in an individual smart contract, so that counterparty risk is transfered to a smart contract risk instead, correct? I see a lot of parallels with state channels here (money is locked up in a smart contract and can be streamed off-chain), is that a valid comparison?
Hi Samuel, I think your description makes sense. In general, although the caveat is that I haven’t performed a technical DD to understand the risk bucketing within either Superfluid’s or Compound’s smart contracts!