Compound – a decentralized protocol for working with cryptocurrency markets, allowing users to invest or borrow various assets. Interest rates are set algorithmically, based on current supply and demand, and can be adjusted approximately every 15 seconds (with each new Ethereum block).
COMP Is a proprietary Compound token of the ERC-20 standard, created to decentralize protocol management. COMP holders have the right to vote on proposed changes and propose them themselves. COMP is automatically distributed among users interacting with the platform in one way or another – depositing funds into a pool, lending, repaying a loan. 06/25/2020 Compound (COMP) token was added to the Binance exchange. Trading pairs: COMP / BTC, COMP / USDT, COMP / BNB, COMP / BUSD. Trading on the regulated exchange Currency.com is also available.
Read the @BinanceResearch one-pager about Compound, one of the leading #DeFi protocols. ⬇️https://t.co/RVnvexss2c
– Binance (@binance) June 25, 2020
We offer an overview of the Compound platform and its COMP token from the editorial staff of Bitcoinminershashrate.com.
The content of the article
Compound (COMP) Chart and Rate
Binance DCOMP / USTD price chart:
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|Total emission||10 000 000 COMP|
|Current issue (as of 19.08.2020)||3 207 162 COMP|
|Course (as of 08/19/2020)||196,13 $|
|Market Capitalization (as of 08/19/2020)||626 859 777 $|
|Cryptocurrencies||Binance, OKEx, Coinbase Pro, BW|
About the Compound project
The Compound platform belongs to the representatives of DeFi projects (decentralized finance). The purpose of this direction is to remove intermediaries, that is, banks, and to reduce the cost of financial transactions, for example, obtaining loans. It also expands the sphere of influence – even people without access to banks can use decentralized banking services.
Compound supports the following currencies: ETH, DAI, USDC, ZRX, BAT, USDT, WBTC, REP, SAI. The table displays how much of the total funds is contained in the credit pool, how much of them is borrowed, what interest rates for lending and depositing. These indicators are constantly being adjusted.
Compound works like a bank. Members deposit their cryptocurrency and earn interest income on a regular basis. However, the difference is that the company does not hold any assets. Everything is controlled by a smart contract. No person or group of people can control funds or appropriate them for themselves.
To start interacting with Compound, you need to connect your Ethereum wallet The most convenient way is to use the Metamask extension. As soon as you deposit cryptocurrency on the platform, you can use all the other functions, in particular, take loans, providing your assets as collateral.
The compound offers floating interest rates – a special algorithm analyzes supply and demand for a specific currency. Also, 10% of the earned interest goes to the creators of the project. You can withdraw your funds from the pool at any time, the duration of the withdrawal to the Eth-wallet is no more than fifteen seconds.
You can use the funds invested in the pool as collateral for obtaining a loan in other cryptocurrencies. At the same time, LTV (loan to collateral ratio) is 100%. This means that you can take an amount equal in value to the collateral. Most centralized lending platforms set LTV 50-80%, that is, only that percentage of the collateral will be given to you as a loan.
Features and purposes of the Compound token (COMP)
COMP is an ERC-20 token that allows the community to participate in the governance of the protocol. Asset holders (or their delegates, that is, those to whom they transferred their rights) discuss, make proposals and vote on all changes in the system. The creators of the ecosystem saw the need to put COMP in the hands of users and applications – an effective method to encourage users to participate in management and thereby modernize the protocol. Such innovations were announced in May 2020.
Possible suggestions are related to such aspects as:
- adding new coins;
- delisting coins;
- correction of algorithms for calculating interest rates;
- ecosystem management methods.
Every day, approximately 2,880-2,900 COMP tokens are distributed between markets and users in proportion to the supply and demand in that market. The table provides an example distribution at the time of this writing. The greatest market activity is observed with the DAI stablecoin.
Further, within the framework of each individual market, half of the tokens go to suppliers (those who invested their cryptocurrency), and half to borrowers. To do this, you need to complete at least some financial transactions with the protocol for the indicated period of time. COMP is automatically transferred to the user’s wallet upon reaching the minimum threshold of 0.001 COMP.
The Compound Governance Explorer tool allows you to track the distribution and voting process, as well as view the leaderboard. Profile of the leading user by weight of votes at the moment.
The total emission of COMP is 10 million, of which 42.3% is reserved for distribution to users.
Advantages and disadvantages
- The COMP token is credited to users as passive income as a reward for other activities on the platform.
- Compound is a popular DeFi protocol, which is taken as a basis by other projects (Dharma, Argent, Zerion, etc.).
- There are no restrictions for use by country of residence or other factors.
- Support from strong investors – Coinbase Ventures, Polychain capital.
- API and detailed documentation that allows developers to use Compound to create new defi applications.
- At the moment, the platform only allows the use of tokens placed on the Ethereum blockchain, and that is not all.
- As an emerging new product in the industry, smart contracts are still prone to bugs and vulnerabilities.
The COMP token surprised with its unexpected rise in price almost immediately after the launch, and is now also in a growth phase. According to research by Flipside Crypto, most of COMP holders are now using it for market speculation, amid price fluctuations, this is not surprising. Plays the role and relevance of the platform itself. Compound is actively developing, entered the DeFi consortium organized by the Huobi crypto exchange, and launched an oracle of cryptocurrency prices available to everyone.