Compound is a decentralized financial lending platform that allows its users to earn interest on their cryptocurrencies through the process of depositing crypto-based pools supported by the platform.
The compound network gives its participants the opportunity to borrow, lend or earn a profit on their blockchain-based assets. On the platform, when the participants make cryptocurrency deposits into the compound pool, they are rewarded with cTokens. The cTokens has given to the depositors also serve as a representation of each individual’s stake in the compound pool. This in turn is used in redeeming crypto assets that have been previously deposited into the pool at any time.
In the practical sense of things, if a participant on the network deposits Ethereum tokens, the user is issued cETH tokens. Over the period while the Ethereum assets are still deposited in the pool, the value of the cETH tokens rise over the ETH deposited. Whenever the participants are willing to withdraw their Ethereum assets, the exchange rate increases. This is the interest rate accrued on crypto-assets over time whilst it is deposited in the compound pool.
On the other hand, the borrowers can also take safe loans from any of the compound pools by fulfilling the collateral requirements. The highest level of loan-to-value ratio is tied to the value of the collateral asset. However, the current range is between 50 to 75%.
The borrowers are also required to pay interest as is the case of fiat loans. The interest rates paid vary among the borrowers. However, in the case of a borrower not being able to pay or the value the required threshold, the assets are automatically liquidated.
Who are the Founders of Compound (COMP)?
The compound minnet was launched officially in 2018 and ever since has stayed at the top with Major cryptocurrencies.
Compound was co-founded in 2017 by Robert Lashner and Geoffrey Hayes. Before establishing the compound network, both of the founders worked in high-profile positions at an online food delivery service known as postmasters. Currently, the two hold major stakes in the development company behind the creation of the compound network, Compound Labs. Hayes serves as the CTO of the company while Lashner serves as the CEO of the company.
The co-founding partners both have experience in running companies. In particular, Lashner is well-known in the cryptocurrency space for his contributions to the growth of several blockchain platforms. Among them includes Argent Wallet, Blockfolio, and Opyn. In the present day, the Compound network comprises over a dozen individuals, more than half of whom work as engineers.
What is Compound (COMP) used for?
The compound network plays the part of an intermediary which connects individuals who need cryptocurrency loans with individuals who are willing to loan their cryptocurrency assets. The platform does this with a combination of smart contracts being run by the Ethereum network and a cryptocurrency-based rewarding system.
The compound system also has the inherent trading values of cryptocurrencies. As such, COMP tokens can be traded with other cryptocurrency pairs. This helps the participants on the network make an additional profit through these trades while also earning interest on their cryptocurrency assets in the compound pool.
What Is the Unique Point of Compound (COMP)?
According to the creators of the Compound network, most of the cryptocurrencies available on exchange platforms sit on the lists without doing anything. Bringing about a change such that the cryptocurrency does something for its holders. This was the idea behind creating a decentralized lending platform that its participants can earn from by just being part of the network.
The system allows lenders and depositors to execute business in a completely non-trust-based operation. As such, anyone in need of cryptocurrency assets to execute a transaction can easily access a loan in that cryptocurrency and payback later.
Another part of the system that sets it different from other blockchain-based ecosystems is its governance process. On the platform, the holders of COMP, the native governance token on the cryptocurrency can propose changes to be executed on the network. When these changes are proposed, they are then debated and voted upon, the results of the process determine if the proposal will be executed or not. These sorts of changes can include the choice of addition of new cryptocurrencies to be supported on the platform and adjustments to the factors surrounding collateralization. All of this is done without the intervention of the Compound team.
How many Compound (COMP) coins are in circulation?
In a similar nature to other existing cryptocurrencies, the Compound network had a fixed supply entering into the market. The total supply of the coin is pegged at 10 million COMP.
According to the team, only a predetermined amount capped around 4.2 million tokens out of the total of 10 million tokens will be distributed to the participants of the network over 4 years. The next assignment of around 2.4 million tokens is allotted to Compound Labs and its shareholders. The next assignment of 2.2 million tokens goes to the founders and the team to be vested over 4 years.
On the final allotment, a total of 775,000 tokens are reserved on the network to serve as incentives for the governance of the network. The leftover 332,000 tokens are assigned to the community’s future members.
Is the Compound (COMP) Network secured?
The Compound system was designed in such a way that all the operations on the network are automatically taken care of by smart contracts.
The system allows for the minting of cTokens after the deposition of Ethereum or other ERC20 based assets into the pool. It also allows the redemption of participants’ stakes with the cTokens.
The protocol system designed for the Compound network ensures that it is consistently over collateralized. If the collateral happens to drop below the minimum required level, the token is liquidated at a 5% discount.
This system ensures that the required collateral level is maintained by the borrowers and also provides backup for the lenders while also creating earning opportunities for the liquidators.
How do I buy Compound (COMP)?
Compound’s best selling point is its offer of earning potential for cryptocurrency holders on its platform. This has led to increased adoption of the platform. The system is currently available across several exchanges. To buy COMP tokens, the steps below provide the right direction to purchasing its tokens.
- Open an account with crypto trading platform.
- Transfer the specific amount of your fiat currency to your account.
- Wait for your deposit to be confirmed and Buy COMP through your trading account.
Which Cryptocurrency Wallet Supports Compound (COMP)?
The PTPWallet platform supports many cryptocurrencies simultaneously such as Compound (COMP). Because of its vast use case, it has grown to become one of the most used platforms as it serves as an exchange and an engine to discover other cryptocurrencies. Additionally, users can easily use PTPWallet as their Compound wallet because offers a simple and interactive interface making it easy for people to navigate its system.
