Assessing the far-reaching effects of Compound III’s deployment on Polygon

ambcrypto.com:

DeFi lending protocol Compound Finance is in the news after it announced finally deploying its third version to Polygon. Contextually, Compound III is a streamlined version of the main Compound protocol. Here, the former allows the efficient supply of assets and borrowing of stablecoins against various collaterals.

You can now use WETH, WBTC, and MATIC as collateral to borrow USDC, with market-leading efficiency. pic.twitter.com/Ax5va7Uz5H

— Compound Governance (@compgovernance) March 7, 2023

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The disclosure, as stated above, would allow Wrapped Bitcoin [BTC]   nd Ethereum [ETH] , as well as MATIC, to be used as collateral. This development means that Compound will not only operate on the Ethereum Mainnet. So, it joins Aave as the other protocol on the Polygon network.

For a fact, Polygon has recorded significant growth on several fronts already. Therefore, it is no surprise that the Compound community seems to be elated by the update. However, will the collaboration bring about a recovery in Compound’s underwhelming Total Value Locked (TVL)?

According to DeFi Llama , Compound Finance had a TVL of $1.89 billion at press time. This positioned the project in ninth across the DeFi ecosystem. Here, the TVL measures the volume of crypto-assets bound by smart contracts in a particular protocol.

Source: DeFi TVL

For its part, Compound’s TVL has fallen by 4.25% in the last 30 days alone. This has left it at one of its lowest points since 2022. This drop also implies that investor interest in the protocol is now nowhere near its height. 

However, the recently-announced partnership