What is Compound (COMP)? General information about Compound

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2022-04-17 00:44:24

Known as the “first shot” of the DeFi era, Compound attracted the attention of a large number of investors when simultaneously being listed on famous exchanges such as: Binance, FTX, Coinbase, … So where What makes Compound so attractive? Follow the article below to know What is a Compound? and the potential of the project.

What is Compound (COMP)?

What is Compound (COMP)?

Compound (COMP) is a lending protocol built on a decentralized blockchain platform. Through Compound, users can borrow and lend crypto assets without going through a third party. Lenders can earn more from loan interest, while borrowers solve their borrowing needs quickly, anonymously.

As of June 2020, Compound has become the largest DeFi platform in the world with over $500 million TVL (the total amount of assets locked in DeFi smart contracts) and over $900 million on offer.

Despite having a bank-like model, the transaction participants will not directly interact with each other. They adopt a network of smart contracts – the Liquidity Pool to manipulate those transactions. Interest rates are calculated using algorithms and supply – demand levels, which means that interest rates are directly proportional to demand and inversely proportional to supply. Users need to consider this to choose the right loan currency.

How Compound works

How Compound works
How Compound works

First of all, Compound works like a bank model. If you deposit money and receive periodic interest at the bank, at Compound, users can deposit many cryptocurrencies to earn annual interest.

As mentioned in the previous section, COMP users do not have custody. Borrowers and recipients do not directly interact, but through smart contracts. Thanks to that, your money does not depend on any company or business and remains anonymous.

Once funds are deposited onto the protocol, they become a convertible asset. The system will pool these assets together. This method increases the liquidity for the borrower. In addition, lenders can also withdraw their funds at any time without having to wait for the maturity date. After that, the type of token provided to the market is ERC-20 standard.

Advantages and Disadvantages of Compound (COMP)

Advantages and Disadvantages of Compound (COMP)
Advantages and Disadvantages of Compound (COMP)

When learning about Compound (COMP), let’s analyze with CHK the advantages and disadvantages of this cryptocurrency exchange.

Advantages of Compound

One of the reasons why COMP is so popular with investors is because it is one of the few platforms that offer crypto lending and mortgage services. The asset portion is encrypted and secured anonymously through the blockchain. Outstanding advantages of COMP include:

  • COMP users make money from their own money but do not need to invest a lot of capital.

  • No transaction time limit. Users can trade tokens at any time they want. In addition, when liquidating assets, you will also receive a 5% fee.

  • The governance model is highly appreciated for the safety and fairness of a decentralized DeFi platform.

Limitations of Compound

Despite possessing many outstanding advantages, COMP still has its limitations, including:

  • Still affected by crypto chain market volatility

  • There is a financial risk in the DeFi ecosystem. Specifically, scams, money hacks and code vulnerabilities have appeared since 2020.

Core development team

Compound development team
Compound development team

The COMP project is based in San Francisco, founded in 2017 by Robert Leshner and Geoffrey Hayes. The two COMP co-founders are also longtime business partners. Specifically:

  • Robert Leshner: Company’s CEO. He is also an outstanding financial analyst and economist. Leshner is known as an experienced and knowledgeable startup founder.

  • Geoffrey Hayes: It is known that Hayes is the CTO of the project and is a well-known figure in the cryptocurrency world.

  • Torrey Atcitty: Application lead – The leader in mobile development at Postmates, Kahuna and Aha mobile.

  • Calvin Liu: Strategy lead – formerly an analyst at Gusto, an advisor to Promontory, with a reputation in crypto investment.

Investors

Currently, Compound is owned by big names such as: Dragonfly Capital, Polychain Capital, Coinbase Ventures, Paradigm or a16z invest.

Road Map (Road Map)

According to Robert Leshner, Compound is designed as an experiment – a test of borrowing and lending features on a decentralized blockchain platform. Therefore, unlike many other cryptocurrency projects, Compound currently does not have a clear development roadmap.

How COMP works

How COMP works
How COMP works

The COMP protocol allows participants to deposit crypto as a lender, or withdraw as a borrower. The lender’s assets are centralized by the system, and then the borrower can borrow through the exchange’s method.

However, you need to be aware of the amount of money you are allowed to borrow at COMP. Each person can only borrow the amount of cryptocurrency that is worth less than his or her own collateral. This loan amount is also depending on the liquidity as well as the market capitalization of the collateral on.

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After lending at COMP exchange, the lender will receive the corresponding amount of Tokens. The platform’s algorithm will continuously update changes in the supply-demand relationship of the market. When lending with Compound, you can completely withdraw assets whenever you want. In addition, in principle, the demand for the asset will be proportional to the interest rate. That’s why lenders don’t want to borrow too much.

In addition, as mentioned above, the exchange has regulations on the amount of money you can borrow. In case you borrow more than collateral, you are forced to face the risk of liquidation of that property.

There are two options available to holders of borrowed assets. First, they can liquidate all of the above assets.

Second, they will buy back these assets at a discounted price. In addition, borrowers are also allowed to pay part of their debt. This helps increase the likelihood of borrowing above the liquidation threshold, while continuing as usual.

Information about Compound . tokens

Information about Compound . tokens
Information about Compound . tokens

What is COMP Token?

COMP is the official token of the Compound ecosystem, following the ERC-20 standard of the Ethereum network. The total supply of COMP tokens is up to $10 million COMP. More than 42.3% of that goes to paying people who participate in the ecosystem. This currency plays an important role in maintaining stability, security as well as creating economic incentives for participants.

Basic information about COMP token

Token Name

COMP token

Ticker

COMP

Blockchain

Ethereum

Token Standard

ERC-20

Contract

0xc00e94cb662c3520282e6f571721400a726888

Total Token Supply

10,000,000 COMP

Circulating Supply

6,558,919 COMP

Market Cap

$895,642,709

COMP Token Distribution Rate

Liquidity Mining

42.3%

Shareholders’ shareholders

24%

Founders & Teams

22.5%

Community

7.75%

Future Team Member

3.72%

COMP Coin Sale

Through 2 rounds of funding, Compound has successfully raised a total of $33.2 million USD. Of which, $8.2 million from Seed Equity and $25 million from other large investment funds (Poly chain, Coinbase Ventures, a16z, …)

COMP Token Release Schedule

How COMP distributes Liquidity Mining:

  • Every time a block of Ethereum is created, 0.5 COMP will be sent from the smart contract to the COMP protocol. On average, about 2,880 COMPs are formed every day. It is estimated that it will take 4 years to generate all the tokens.

  • After being sent to the Protocol, COMP tokens will be distributed according to each type and proportional to the amount of interest in the market. The above COMP number continues to be divided 50:50 for lenders and borrowers.

COMP Coin Exchange

To own COMP, buy it at the exchanges that list this coin. Up to now, COMP coin is being supported by many major exchanges including: Binance, Huobi Global, Coinbase, MXC, OKEx, …

COMP token storage wallet

You can store COMP coins at wallets that support ERC-20 tokens such as:

  • Myetherwallet

  • Trust Wallet

  • Atomic Wallet

  • Metamask

Some questions about the Compound project (COMP)

Some questions about the Compound project (COMP)
Some questions about the Compound project (COMP)

Cryptocurrencies that COMP supports

Cryptocurrencies currently supported by the platform: Ethereum (ETH), DAI Stablecoin (DAI), USD Coin (USDC), Augur (REP), Sai (SAI) and Basic Attention Token (BAT).

Copper price COMP

At the time of writing, the price of COMP is 3,126,073.93 VND and fluctuates about 3-4% within 24 hours, ranked 87th. The bottom price of this coin was set on June 18, 2020 at $61.25, just three days after recording the highest price that COMP has reached. tokens ever achieved are $381.89 on June 21, 2020. This is an amazing move in such a short period of time.

Compound Security (COMP)

The platform is a dApp that runs on the Ethereum blockchain, thus secured by the Ethereum system.

COMP interest rate regulations

COMP interest rates depend on the liquidity of each cryptocurrency market. As mentioned above, this interest rate will be based on supply – demand and real-time up – down trends. In case of high liquidity, the interest rate will be low. Conversely, interest rates will increase if liquidity is scarce.

Prestigious international COMP token trading platform

COMP token trading on international exchanges is done in BTC, USDT, …

Exchanges

Transaction fee

Binance

0.015 – 0.100%

Okek

0.060 – 0.150%

Bittrex

0.25%

Kucoin

0.080 – 0.100%

summary

Through the above article, CHK hopes to help readers answer the question What is a Compound?. At the same time, CHK hopes that the basics of this offline lending and borrowing platform will help your investment decisions. Don’t forget to follow CHK to update more useful posts in the future.

#Compound #COMP #General #information #Compound

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