. What is Compound (COMP)? Here is the COMP Token in Full Details – In this article, What is Compound (COMP)? We will answer the question and try to present details about the project.
Compound (COMP) Nedir?
Compound Finance is a decentralized finance (DeFi) protocol that allows users to deposit, borrow and earn interest on cryptocurrencies.
The mechanism for doing this is to create liquid money markets for cryptocurrencies by determining interest rates through algorithms. The main reason they are popular is because they were Coinbase’s first investment in a cryptocurrency project.
Given the high profile of the exchange, with interest in the project increasing, COMP token prices skyrocketed to $ 370 in the first month of launch. Currently, the token is trading around $ 408 as it rises for another move.
What is COMP Token?
COMP is a DeFi money market protocol
COMP owners have the right to vote on the future of the protocol.
Interest is distributed to borrowers and lenders in the token’s liquid markets
The token is traded on various high profile exchanges
How Does Compound Work?
In short, the Compound protocol works similar to a bank. You can deposit various funds and earn annual interest on your deposits. Such a feature is particularly attractive in light of the fact that global central banks are turning to negative interest rates.
Another key difference from traditional banks is that Compound does not take responsibility for your crypto deposits. In fact, you’re sending the crypto to interact with a smart contract rather than a company or user at the other end of the transaction.
This feature is very important as it means that no one, authority or intermediary person can control your money.
The reason this is so interesting is because Compound is a DeFi platform that doesn’t need to track the Federal Funds Rate. It can do something completely different and is resistant to censorship as there is no central authority.
Since May 2020, Compound has shifted to what it calls “community driven governance”. Basically, this means that compound token holders can make suggestions and vote on decisions on how the protocol is developed and run. To clarify the abstraction, this means having an interest in deciding what kind of collateral the Compound should support or what interest rates should be.
Technically, there are a total of 10 million COMP tokens, 42.3% of which are allocated to users to earn when they use compound. For each Ethereum block, 0.5 COMP is distributed across the protocol’s 9 markets in proportion to the interest accumulated in the market.
Each of these markets receives a portion of the tokens distributed at a 50:50 ratio among the suppliers and borrowers of a particular cryptocurrency. Therefore, the crypto earning the most COMPs per day changes frequently.
The token is traded on various exchanges such as Coinbase, FTX, and SwissBorg.
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