The price Compound today is 313.57 USD, and the trading volume in 24 hours - 112,749,759 USD. The crypto asset has grown by -4.71% over the day. Currently, the coin’s market capitalization is 1,726,564,409 USD, and has 5,506,108 coins in circulation with the max supply of 100,000,000 coins COMP.
What is a Compound (COMP)?
Compound is a DeFi lending protocol that allows users to earn interest on their cryptocurrencies by depositing them in one of several pools supported by the platform.
When a user deposits tokens into a composite pool, they receive cTokens in return. These cTokens represent an individual's share of the pool and can be used to redeem the underlying cryptocurrency originally deposited in the pool at any time. For example, if you put ETH in a pool, you will get cETH instead. Over time, the exchange rate of these cTokens for the basic asset increases, which means that you can exchange them for more of the underlying asset than you originally invested - this is how interest is distributed.
On the other hand, borrowers can take out a secured loan from any Compound pool by making a deposit. The maximum loan-to-value ratio (LTV) varies depending on the collateral asset, but currently ranges from 50% to 75%. The interest rate paid varies depending on the borrowed asset, and borrowers may face automatic liquidation if the amount of their collateral falls below a certain support threshold.
Since the launch of the main network Compound in September 2018, the platform's popularity has increased dramatically, and recently the total blocked value exceeded $ 800 million.
Who are the founders of Compound?
Compound was founded in 2017 by Robert Leshner and Jeffrey Hayes, who previously worked in senior positions at Postmates, an online food delivery service. The two continue to hold senior positions at Compound Labs, Inc , the software development firm behind the Compound protocol, where Leshner is currently CEO and Hayes is CTO.
While both founders have a track record of building successful companies, Robert Leshner in particular has been particularly active in promoting the blockchain space and has publicly invested in popular crypto platforms including Argent Wallet, Opyn, and Blockfolio.
The Compound team now consists of more than a dozen people, almost half of whom work as engineers.
According to Compound, most cryptocurrencies are dormant on exchange platforms, doing nothing for their holders. Compound aims to change this with its open lending platform, which allows anyone making deposits backed by Ethereum tokens to easily get interest on their balance or take out a secured loan - all in a completely unreliable way.
Compound community management distinguishes it from other similar protocols. Owners of the platform's own management token, COMP, can propose changes to the protocol, discuss and vote on whether to implement changes proposed by others, without any involvement of the Compound team. This may include choosing the cryptocurrency to add support for, adjusting collateral factors, and making changes to the way COMP tokens are distributed.
COMP tokens can be purchased on third-party exchanges or earned by interacting with the Compound protocol, for example, by depositing assets or taking out a loan.
How many COMP coins are in circulation?
As with many other digital assets, only a fixed number of COMP tokens are provided. The total offer is limited to 10 million comps, and at the time of writing, more than a third (~ 4.4 million) are in circulation.
Of these 10 million tokens, just over 4.2 million tokens will be distributed to Compound users over a 4-year period. The second largest distribution (almost 2.4 million COMP) goes to the shareholders of Compound Labs, Inc., while 2.2 million tokens will be distributed between the founders of Compound and the current team with a 4-year transfer schedule.
Finally, 775,000 comps are reserved for community management rewards, and the remaining 332,000 tokens will be allocated to future team members.
The exact rate of COMP emission can change over time, as voters can increase or decrease the emission by passing the proposal through community management.
How is the Compound network protected?
Everything in Compound is automatically handled by smart contracts that act to issue cTokens after depositing Ethereum and ERC20 assets and allow Compound users to redeem their stake using their cTokens.
The protocol applies a provisioning factor to all assets supported by the platform, providing constant redundancy for each pool. If the collateral falls below the minimum support level, it will be sold to liquidators at a 5% discount, paying off part of the loan and returning the remainder to an acceptable collateral ratio.
This mechanism helps to ensure that borrowers maintain the level of their collateral, provides insurance for lenders and creates an earning opportunity for liquidators.
- To own your crypto assets, you need to manage your own private keys.
- Ledger hardware wallets make private key management easy and secure.
- Each unique 24-word recovery phrase creates a new set of private keys.
- Make sure you secure your 24-word recovery phrase properly.