Compound(COMP)

Founded in 2017, Compound is an Ethereum-based DeFi lending protocol that allows users to easily borrow or lend crypto assets in a trustless, decentralized environment. The protocol was developed by Compound Labs Inc., a software development firm led by San Francisco-based Robert Leshner and Geoffrey Hayes. As of Q2 2022, Compound ranked among the top 10 largest DeFi protocols, with a TVL (Total Value Locked) of around $3 billion. 

Compound protocol was created with the aim of putting people’s idle crypto assets to use. It does that by providing them an open lending platform that can be used by anyone to deposit Ethereum-based tokens to earn interest or take a secured loan in a completely trustless manner.

COMP, the native token of the Compound protocol, is based on Ethereum’s ERC-20 standard and is used for decentralized governance of the platform. COMP holders are allowed to propose, debate and implement changes to the Compound protocol, without any intervention from the Compound team. The entire process happens on-chain, in a completely transparent manner. Each COMP token equals 1 vote. One can even delegate his/her voting right to someone else. While all COMP holders can debate and vote on protocol modifications, only the ones with at least 100,000 tokens can float proposals to make such changes.

COMP price

The COMP price rapidly surged past $300 within a week after its June 16, 2020 launch, and reached $336 on June 22. However, it soon ebbed and stayed mostly within the range of $150 - $250 until late September 2020, when it began its downward descent, bottoming out at $80 on Nov. 3, 2020. 

COMP coin’s next noteworthy surge came in January 2021, amid a market-wide crypto boom, when it rallied onto breach the $500 resistance for the first time, and registered $573 per token valuation on Feb. 12, 2021. Buoyed up further by market forces, COMP coin registered its all-time high of $911 on May 12, 2021. COMP’s fully diluted valuation crossed $9 billion on that occasion. 

As per our COMP live price chart, COMP USD price kept fluctuating between $300 to $500 thereon, until December 2021, when pulled down by bearish forces, it started gradually declining, and plummeted to its all-time low of $26 on June 18, 2022.

How COMP works

Anyone can sign up with Compound and use the protocol without providing any personal information. All you require is an Ethereum compatible wallet like MetaMask and you’re good to go.

Lenders can deposit their crypto assets into Compound pools, in return for ERC-20-based ‘cTokens’, which represent their stake in the corresponding pool. For instance, you can deposit ETH into a pool, and obtain cETH in return. These cTokens can be redeemed any time for the underlying crypto asset. Over time, with the increasing exchange rate of these cTokens, the lenders can convert them into a higher amount of the corresponding underlying asset. Hence, earning interest through Compound becomes as easy as just holding a cToken. 

When it comes to the borrowers, they can deposit collateral and avail a secured loan from any of the Compound pools. The Loan-to-Value (LTV) ratio and interest rate paid varies from asset to asset.

Compound distinguished itself from the other DeFi protocols by pioneering the concept of ‘Liquidity Mining’ in the crypto world. While it is common for everyone to look for the best opportunities to earn interest on their crypto deposits, also referred to as ‘Yield Farming’, Compound introduced ‘Liquidity Mining’, as per which the users could earn COMP governance tokens by simply engaging with the protocol. COMP token was launched in June 2020, with a maximum fixed supply of 10 million. 

COMP news, updates and highlights

In important COMP news, the Compound protocol, riding high on the yield farming and liquidity mining craze, crossed $1 billion in crypto loans issued, for the first time, in July 2020. This came less than a month after the launch of the COMP token. 

More recently in May 2022, Compound’s enterprise arm ‘Compound Treasury’ received a fairly mixed credit rating from the S&P Global. Rated B- by S&P Global, it meant that the USDC-based yield platform was deemed as ‘speculative’, but capable of meeting its current financial commitments. However, most importantly, it was the first time that an ‘Institutional DeFi’ product earned a score from any of the major credit rating agencies.

Frequently asked questions about COMP

• Is it possible to mine or stake COMP?

No, you cannot mine COMP tokens. However, it’s possible to organically earn them by engaging with the Compound platform.

• Which are some of the best COMP wallets?

You can store your COMP tokens in any ERC-20 compatible wallet. Some of the best COMP wallets are MetaMask, Ledger, Trezor and MyEtherWallet.

• What can you do with COMP cryptocurrency?

You can use your COMP tokens to participate in Compound protocol’s governance. They can also be traded against other crypto assets on established crypto exchanges.

• How can you buy COMP?

You can buy COMP from any of the well-known crypto exchanges using trading pairs like COMP/USDT, COMP/BTC, COMP/ETH and so on. It can even be purchased with fiat currency on some of the platforms.