The Compound platform is a Defi lending project developed on the Ethereum blockchain. In fact, any owner of a supported cryptocurrency can make a component of it in a smart contract.
There it will join the liquidity pool and start generating interest. At the time of writing, the Compound protocol supports the following altcoins: ETH, DAI, SAI, USDC, USDT, WBTC, ZRX, BAT, REP.
What is Compound?
The Compound project was created in 2017, and a test version of the Compound system was launched in autumn 2018. The project’s white paper was published six months later, and in mid-May 2019 they updated the protocol to version v2.
The project was doomed to success, as Compound was one of the first projects to receive funding from Coinbase Ventures. They received funding in the form of an initial investment $8 million. The companies which took part in it were: Andreessen Horowitz, Polychain Capital and Bain Capital Ventures.
The real breakthrough in the project was on 10 June 2020. Then Compound announced that it would start distributing the COMP management token after the community voting. Every day 2880 COMP tokens are distributed among the protocol users, in proportion to the number of transactions in a cryptocurrency.
In each market (ETH, USDC, DA) suppliers got 50% of the distribution and 50% – borrowers. As soon as the user has earned 0.001 COMP, they are automatically transferred to his address. We cannot earn COMP by traditional mining, all coins are issued exclusively by developers. The total offer is 10,000,000 COMP, at the time of writing 3,319,780 coins are in circulation.
Following this news, one after another listings on top crypto exchanges, such as Coinbase Pro, Binance, Okex, Huobi Global, Kraken, Bitfinex, Uniswap and others, poured in, and the locked coins value flew up from 105 million to more than 1 billion as of today.
In June-July 2020, Compound ranked first among locked coin of the Defi projects, according to Defipulse. In July-August, new Defi competitors knocked it off pedestal. But now most Defi coins are in the correction stage, COMP rises in the ranking of locked coins up and on the horizon the top 5.
COMP token speculation, where to buy and sell?
Since the beginning of September, when the almost all Defi tokens price went to a deep correction, after a sharp growth, COMP could not stand aside from the trend and began to fall. The COMP value decreased from the high $276 on 1 September, to a local low $93, the fall was 66.5%.
As we can see in the chart, from mid-September until today, the price falls without corrections in the channel at average volumes. That is, there is no special interest from buyers.
Nevertheless, today the price is trying to go beyond the channel. That’s why, the first correction can start, which has buyers have been waiting for a long time. If the price is fixed outside the channel, it may grow to the level $123. In case today is closed only by a false breakdown, the token value fall may continue to the next level from below – $80.