Compound (COMP) protocol allows users in supplying and borrowing Ethereum tokens at variable interest rates. This is done by the protocol through a series of decentralized interest rate markets.
Robert Leshner and Geoffrey Hayes founded Compound platform back in 2017. Earlier, they both worked in high-profile roles of an online food delivery service named Postmates. Both of them hold executive positions in the software development company behind the Compound protocol, Compound Labs. While Robert Leshner is the current CEO of the company, Geoffrey Hayes is the CTO. Compound team is small and most of them are engineers.
In September 2018, the Compound mainnet was launched and since then this platform has seen meteoric rise. The total value locked TVL of Compound is over US$800 million.
To help you make a decision about buying COMP coins, let me walk you through different important aspects associated with Compound project.
Compound is a decentralized finance lending protocol, helping users in earning interest on cryptocurrencies. The users can earn interest by depositing their cryptos into one of the many pools supported by the Compound platform.
COMP is an Ethereum token that helps the Compound protocol in community governance. If you are a holder of COMP governance token or a delegate of the network, you can debate, propose, and vote the protocol’s changes.
A user can deposit a wide array of crytpcourrencies to a Compound pool. In return, the user receives cTokens, which represents the particular user’s stake in the pool. You can use cTokens for redeeming the underlying crypto asset, which was initially deposited by you to the Compoud pool. This redeeming of the deposited cryptocurrencies can be done any time.
Suppose, you are depositing Ether ETH token in a Compound pool. In return, you’ll receive cETH from the pool. For depositing the Ethereum, you are earning interest rate (APY). Suppose, you put the cryptocurrency in the pool for a period of 60 days. If you want to redeem the underlying digital asset ETH, you can do that by providing them the cTokens (cETH in this case).
At the time of redeeming, you’ll receive the number of ETH that you deposited plus the ETH you earned as interest rate. The interest rate here is provided by the Compound pool in terms of the underlying asset that you had deposited. This means you’ll get more of the underlying asset that the amount deposited by you initially.
Compound pool also provides secured loans to borrowers by depositing collateral. On the basis of the collateral asset given as collateral, the LTV (Loan-To-Value) ratio varies. However, the range currently varies from 50% to 75%. If the collateral of a borrower drops below a specific maintenance threshold, he/she may face automatic liquidation.
All these facts and figures will help you to make a decision on investing in Compound’s native token by making COMP to USD price predictions:
Compound project offers a open lending platform where cryptocurrency holders can deposit their supported Ethereum tokens and in return the hodlers can either earn interest on their lent cryptos or take out a secured loan. This entire process takes place in a trustless manner.
You can buy Compound coins from 3rd party cryptocurrency exchanges. COMP can also be earned through interaction with the Compound protocol, either by depositing your crypto assets or by taking out a secured loan by depositing cryptocurrencies.
Compound protocol helps users earn passive income by lending their bought cryptocurrencies and not keeping them idle on the wallets of crypto exchanges. With the help of Compound platform, the crypto hodlers can earn interest rates without completely relinquishing ownership of their cryptos. This is the main benefit that attracts users.
Compound allows users to utilize Bitcoin (BTC) coins in decentralized finance environment by introducing ERC-20 representation of locked Bitcoin, Wrapped Bitcoin (WBTC).
For accomplishing tasks autonomously, audited smart contracts are leveraged by Compound. The network’s vital functions are taken care the contracts of the network. The tasks that are autonomously taken care of include storage, management, and the facilitation of all pooled capital.
Network security is maintained by Compound through various ways. Reputable agencies such as Trail of Bits and Open Zeppelin have audited the security of the Compound network. They have certified the coding of the network as sound and capable to handle the network’s demand securely.
In terms of interoperability, Compound falls in line with decentralized finance’s general consensus.
The users of Compund platform can leverage 3rd party market management tools seamlessly.
By the end of 2021, the price of COMP is likely to reach around US$352.899.
Compound token’s price is expected to reach around US$500 by the end of 2022.
By 2023-end, the COMP price is expected to reach US$650.
The price of COMP is hovering around US$326.44. However, by the end of 2026, it is expected to jump 10-folds to around US$3,493.1.
You can buy and sell Compound COMP and other cryptocurrencies against various fiat currencies (US Dollar USD, British Pound, Canadian Dollar CAD, South Korean WON, Singapore Dollar, Chinese Yuan, Hong Kong Dollar, etc.) through a wide array of crypto exchanges (centralized or decentralized exchanges) and crypto APIs. Use Dollar Cost Averaging DCA strategy to invest in cryptos to minimize the risks associated with high volatility.
If you want to increase your investment explosively in the coming 5-to-10 years, buy crypto coins now. Keep an eye on the market news, price statistics, block times, blockchain news, and others to time your trading of Defi protocols and tokens for maximum profit.
You can also diversify your crypto coin portfolio by including other cryptocurrencies such as AAVE, Ripple XRP, Bitcoin Ether ETH, Bitcoin Gold (also called Bit Gold), Bitcoin Cash BCH, Basic Attention Token, Ethereum Classic, Binance Coin, Wrapped Bitcoin (some also call it wrap bitcoin or wBTC), USD Coin, Gemini Dollar, ERC20 tokens (created on Ethereum blockchain), nonfungible tokens NFTs, and others.
Also, invest in various types of stocks, mutual funds, index funds, real estate, and others to improve your personal finance. If possible, get help from a portfolio manager or wealth management firm for maximum return.
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