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by Hideo Nakamura
Rank #202
Compound (COMP)

Compound COMP

$ 55.42
0.00087332 BTC
Marketcap
$ 379,060,570
Volume (24h)
$ 29,333,840
Circulating Supply
6,856,086 COMP
Total Supply
10,000,000 COMP
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All time high price: $ 910.54 93.91%
All time high date: May 12, 2021
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    Compound (COMP) price has decreased -1.36% today!

    Compound (COMP) is a cryptocurrency that operates on a blockchain. Currently, it is trading at $ 55.42 and a market capitalization of $ 379,060,570. The price of Compound has decreased -1.36% in the last 24 hours. Currently, Compound ranks #202 among all cryptocurrencies by market capitalization and has a daily trading volume of $ 29,333,840.

    COMP is the governance token for Compound Protocol and it was distributed since June 2020. It is an ERC-20 token issued on Ethereum. 

    COMP tokens are mainly used for protocol governance. COMP holders can suggest, debate, and implement changes to Compound – without relying on, or requiring, the Compound team whatsoever. COMP also allows its owner to delegate voting rights to an address of their choice.

    What is the Compound Protocol?

    Compound is a decentralized blockchain protocol that allows users to lend or borrow selected cryptocurrencies. It establishes money markets by pooling assets together and algorithmically setting interest rates based on supply and demand of assets.

    To supply or lend crypto assets on Compound, users will have to deposit their crypto assets into the Compound protocol and it will be aggregated into a liquidity pool. Once users have made the deposit, they will receive cTokens in return. Users will start accruing interest by holding the cTokens. 

    Once assets are supplied to Compound, users are allowed to use the assets as collateral. Based on the collateral factor of the assets deposited, users can start borrowing from Compound. Because Compound uses an overcollateralization model, you can never borrow more than what is collateralized. 

     

    Compound content compound1

     

    Who founded Compound?

    Compound was founded by long time business partners, Robert Leshner and Geoffrey Hayes in 2017. Compound officially launched on the Ethereum mainnet in 2018 and their headquarters is in San Francisco. 

    Compound content compound2   Robert Leshner, CEO          Compound content compound3 Geoffrey Hayes, CTO

    How is Compound different from traditional finance?

    Compound behaves similarly to a bank but it is more easily accessible. To use Compound, users are not required to provide personal and private information. Anyone with an internet connection could sign up for Compound and start interacting with the protocol. All they need is some crypto assets stored on a crypto wallet like Metamask.

    In addition, the return rates for Compound are more attractive compared to traditional banks. For example, if you store money in a savings account, it will only generate a measly 0.05% APY. On the other hand, Compound would offer up to 4% APY depending on the assets supplied. 

    Do note that the higher interest rate offered is due to the additional risks incurred by using the Compound smart contract.

    Who are competitors of Compound Protocol?

    Any services that facilitate lending of money is a competitor of Compound. In centralized finance, there are banks, money markets, and crypto lending services such as Nexo, Crypto.com, Celsius Network, Binance, and more. In DeFi, there are other competing services such as Aave.

    How did Compound contribute to the yield farming / liquidity mining craze?

    Yield farming is a process that allows users to earn a return on their crypto assets by providing it to Decentralized Finance (DeFi) protocols such as Compound. Liquidity mining is an additional incentive structure given through the reward of governance tokens to incentivize users to provide more liquidity to DeFi protocols. 

    The release of COMP tokens in June 2020 jump started the yield farming and liquidity mining movement during the summer of 2020. COMP tokens were given to users who lent and borrowed assets on the Compound platform. This incentive made Compound extremely popular and significantly increased the assets lent and borrowed on Compound. 

    How to farm for COMP?

    If you supply or borrow assets on Compound, you will be rewarded with an allocation of COMP, of which 2,880 COMP are distributed daily. COMP tokens are distributed among the various money markets based on the dollar value of assets borrowed. Currently DAI has the highest demand, receiving about 60% of the daily COMP distribution. The allocation is then split equally between suppliers and borrowers.

    Which assets are supported on Compound?

    As of December 2020, there are 9 tokens available on Compound. The supported assets are DAI, ETH, USDC, ZRX, USDT, WBTC, BAT, UNI, COMP. 

    Compound content compound4

    How does Compound Governance work?

    Compound content compound5

     

    A user must have 100,000 COMP tokens on hand or delegated from other users to table a proposal. Once submitted, there is a 3-day voting period wherein a minimum of 400,000 votes must be cast. If a majority of the votes support the proposal, the new change will be implemented after a 2-day waiting period. 

    These proposals may include adding support for a new asset, changing an asset’s collateral factor, changing a market’s interest rate model, or changing any other protocol parameter or variable. These proposals will be in the form of executable codes, not suggestions for the team to implement. 

    To see the list of current and previous proposals, you may read it here.

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