Compound: Everything you need to know

It has been a really long time since the cryptocurrency industry was first introduced and honestly, the industry has had a wonderful journey so far by being able to lure in potential investors from all across the globe and managing to make a name for itself in the global marketplace. Not just that, as mentioned, the industry has had a surge in its overall growth and popularity recently, thus helping it to reach greater heights!

Having said that, I believe a majority of you are already familiar with the basics of the industry and I am sure that you are eagerly waiting for us to start with what we have with us today but, for some of you who are new to this whole thing, it’s best if we have a brief look at the industry first

To begin with, cryptocurrencies as the name suggest is nothing but a form of online or virtual currencies that can easily be made use of for a variety of purposes including the purchase and sale of goods and services as well as for the purpose of trade and exchange over cryptocurrency exchanges available online.

In other words, crypto is a blockchain-based platform that is known to be decentralized to its very core. Being decentralized, the crypto world becomes more than capable of stepping outside the overall control and jurisdiction of central authorities and can work freely without any unnecessary government interferences as well.

Also, when the industry was first introduced there were not many currencies to choose from and honestly, not many people were looking to be a part of it either as people back then were very skeptical with respect to the return on investments they could expect as well as the safety of their money too.

That is surely not the case anymore as today, we have pools of currencies available for investors to choose from, with newer ones coming in with each passing day and tons of new investors joining in every hour.

Speaking of a lot of currencies available today in the marketplace, some of the most popular ones worth investing in includes Bitcoin, Cardano, Baby Doge, Ethereum, Dogecoin, Polkadot, Binance Coin, PancakeSwap as well as EverGrow Coin to name just a few of course.

In addition to this, it feels rather interesting seeing such a rapid growth of the industry over the past couple of years and so, let’s look at some of the major contributing factors responsible for this huge success including portability, high-profit margins, volatility, negligible response time, convince it offers, intuitive nature as well as ease of use of course.

Being volatile, it is important for you to be aware of the fact that, it is not always possible to predict the price changes and act accordingly as the price fluctuations in the crypto marketplace are almost immediate, thus leaving no time to plan. Therefore, whenever dealing in online currencies, keep in mind that, if the industry is providing you with an opportunity to earn huge profits and make quick money, if not done right, you could also end up having significantly huge losses as well.

Not just that, as per the chatter amongst some of the leading experts on the field, it has come to our notice that, crypto is rapidly progressing towards completely revolutionizing the global payment system and from where I stand, it looks like it has already started to do so as many merchants and businesses have started accepting crypto as an official mode of payment from their customers.

Now that you have a brief backstory about the crypto world, you will be able to have a much better understanding of what we have with us today, Compound. To know more, I suggest you read further!

Everything to Know about Compound (COMP)

Compound or as commonly referred to as COMP is nothing but a lending protocol for decentralized finance (DeFi) that is known to allow users on the platform to easily earn interest on their virtual currencies by simply depositing them into one of several pools that are supported by the said platform. 

In other words, Compound is an Ethereum token that is said to enable community governance of the popular Compound protocol. Not just that, the said protocol is a series of dcentralized interest rate markets that are known to allow users to borrow as well as supply Ethereum tokens at variable interest rates. 

Before moving any further, it is probably worth noting that, Compound is known to have been founded by Geoffrey Hayes along with Robert Leshner back in 2017, while both of them have previously worked in senior positions at Postmates, an online food delivery service. Know that, the team at Compound today comprises of somewhere around a dozen individuals, nearly half of which work as engineers. 

Apart form this, COMP is said to be the native utility token of the Compound platform, which as a matter of fact, can be used for a variety of purpose on the platform itself like the fact that, COMP token holders as well as their delegates can also propose, debate and vote on changes to the said protocol. 

Coming back to the topic, the primary users of the platform basically consist of borrowers and lenders. Now, borrowers are simply the users who share virtual currency based collateral on the Compound platform and are permitted to borrow cryptocurrencies that are supported by Compound at a percentage of the posted value. However, on the other hand, Lenders are the users who wish to lend digital currency on the Compound platform.

The lenders can easily do so by sending their tokens to an Ethereum address that is managed by Compound to generate interest. In addition to this, the maximum loan-to-value (LTV) ratio is said to vary based on the collateral asset, but is currently ranging form about 50 to 75 percent.  Also, the interest rate paid varies by borrowed assets and the borrowers can face automatic liquidation if in fact their collateral falls below a specific maintenance threshold. 

Furthermore, Since the Compound mainnet has been launched back in September 2018, the platform is said to have skyrocketed in terms of popularity, and recently passed more than 800 million dollars in total locked value. 

What makes Compound special?

As per the company’s website, the majority of virtual currencies in the marketplace are known to sit idle on various exchange platforms, doing absolutely nothing for their holders. Not just that, Compound looks to change this with its popular open lending platform, which is said to allow anybody who deposits supported Ethereum tokens in order to easily earn interest on the balance or take out a secured loan, that too all in a completely trustless way. 

Other than this, Compound’s community governance is known to set it apart from other similar protocols. Also, COMP holders can easily propose changes to the protocol, vote as well as debate whether to implement changes that are suggested by others, without any involvement from the platform’s team. 

This can include choosing which virtual currencies to add support for, making changes to how COMP tokens are distributed as well as adjusting collateralization factors. Lastly, these COMP tokens can easily be purchased with the help of third-party exchanges or can even be earned by interacting with the Compound protocol, like by depositing assets or taking out a loan. 

Now that we have talked much about Compound, some of you must be wondering, whether or not it is a good idea to invest in the platform? If that’s the case, then let’s find out, shall we?

Investing in Compound (COMP)

As of today, the price of Compound is about 143.76 US dollars with a twenty-four-hour trading volume of 442,398,715 dollars. Not just that, in just the past twenty-four hours, the value of Compound has gone up by 10.07 percent, and with the current market cap of 957,478,821 US dollars, COMP is currently placed at #88 position as per the CoinMarketCap rankings.

Also, it is worth mentioning that, the current circulating supply of Compound is 6,660,367 COMP coins, with the maximum lifetime supply of the token being about 10,000,000 COMP coins. In just the past week alone, the price of the platform has fallen by 17.70 percent.

Reading so far, you must have gotten a fair understanding of the platform and by now, you should be able to figure out on your own whether or not investing in Compound is the right thing for you to do. Seeing what it has to offer when combined with its performance in the recent past as well as its plans for the near future, I certainly believe that Compound can prove to be a profitable investment shortly, which is likely to provide you with higher returns and it is a possibility that your current investment may increase in value. But again, nothing can be said for sure!

As mentioned at the very beginning, crypto is a highly volatile marketplace and is extremely uncertain. Thus, It is very important for you to understand the fact that just like any other currency in the crypto marketplace, Compound does have its own risks as well and you should invest only if you are willing to take those risks and bear any and all losses if at all necessary.

If you are wondering, where can you buy Compound? Let me help you with that. Currently, Compound is available on all major crypto exchanges but, some of the popular exchanges that have COMP listed on them include Binance, OKX, CoinTiger, Bybit as well as FTX to name a few.  

In conclusion, what are your thoughts on Compound? Do let us know in the comments area below. To know more about various cryptocurrencies, do check out other articles we have on our website. Thank you for your time & if you found our content informative, do share it with your investor friends!

Also read: Top 10 Indian Cryptocurrency projects in 2022