Compound is an EVM-compatible decentralized finance (DeFi) lending protocol where users can earn interest by depositing their cryptocurrency holdings into various pools on the platform. COMP is the governance token of the Compound protocol. It empowers token holders to delegate their holdings, submit proposals, and vote on other users' proposals to implement upgrades to the platform.

The Compound dApp works on the Ethereum blockchain and allows users to lend their cryptocurrencies to liquidity pools and generate interest. Users who deposit a specific, supported cryptocurrency into a lending pool receive a cToken representing the deposit.

These cTokens can be used for trading or conducting transactions without the need to lock up liquidity. However, they can only be redeemed for the cryptocurrency they locked in Compound.

COMP is an ERC-20 token designed on the Ethereum network and functions as the native cryptocurrency and governance token of the Compound ecosystem. All users interacting with the Compound protocol through lending or borrowing receive COMP tokens as incentives.

Compound is a decentralized protocol that establishes money markets - pools of cryptocurrencies with algorithmically derived interest rates that fluctuate based on the supply and demand for each asset. Unlike conventional financial platforms, Compound users do not have to deal with any intermediaries. There is complete transparency in how the floating interest rate gets set for lenders and borrowers, depending on the activity level.

Each of the supported crypto assets that the Compound protocol has liquidity pools for offering a transparent and verifiable ledger to the public. Users can access this information to review historical data about all pool transactions and interest rates.

Compound works differently from a peer-to-peer platform as it aggregates the supply of each user, converting all supplied digital assets into fungible resources. In this manner, the platform provides more liquidity in the market than direct lending protocols offer.

This mechanism also allows users to pull liquidity out of the pools and withdraw their assets at any time instead of locking them up for specific periods. The cTokens provided to lenders within the Compound protocol represent the token supplied, which keeps growing as it accrues interest.

Compound launched on the Ethereum mainnet in September 2018. The protocol was founded by entrepreneurs Robert Leshner and Geoffrey Hayes.

Their project raised $8.2 million worth of funding in 2018. Early investors in the DeFi protocol include Andreessen Horowitz and Bain Capital Ventures.

In 2019, the platform raised an additional $25 million in funding from early investors and Paradigm Capital. In May 2019, Compound v2 was announced, offering several new features, such as support for additional assets, individual risk models for each supported asset, and a smart contract gateway.

In October 2019, the team of developers reduced their administrative privileges and started the process of decentralized ownership and management of the protocol. In April 2020, COMP token holders were given the right to handle the decentralized governance of the Compound protocol.

The initial set of COMP holders comprised shareholders of Compound Labs, Inc. In June 2020, the distribution of COMP tokens among Compound users began. The process would continue for a period of four years.

While it is not possible to accurately predict the price of COMP over any duration, monitoring certain fundamental factors can provide insights into COMP price statistics:

Level of On-chain Activity on Compound

Increased on-chain activity on Compound, driven by more users lending and borrowing cryptocurrencies, can potentially drive up the value of COMP. This activity is expected to grow as Compound adds support for more crypto assets or expands to new blockchain networks.

Investor Outlook

A positive outlook towards decentralized finance (DeFi) services encourages lending and borrowing activity on Compound, which supports the COMP price. Conversely, negative market developments may discourage DeFi users, reducing liquidity on Compound and decreasing demand for the COMP token, thereby weakening the value of Compound cryptocurrency.

Market Sentiment

Market sentiment plays a significant role in determining price trends for digital assets. The COMP price may rise during periods of bullish or risk-on sentiment among investors. Conversely, bearish or risk-off sentiment can lead to sell-offs in the crypto market, potentially lowering the Compound price.

COMP is the native cryptocurrency of the Compound ecosystem. It serves the following functions:

Governance Token

As a COMP holder, you can participate in the decentralized governance mechanism of the Compound protocol. You can debate, submit proposals, and vote on other proposals that decide how Compound evolves and functions in the future. You can also delegate your COMP tokens to other voters and participate indirectly in Compounds governance.

Crypto Asset to Trade and HODL

Trade Compound token against other crypto assets to profit from changing market conditions and volatility. You can buy or sell COMP against other digital assets or hold it long-term if you believe in the future potential of Compound protocol. Review the live price of Compound cryptocurrency, COMP market cap, circulating supply, 24-hour trading volume, and the latest crypto news before trading COMP in the market.

Earn Passive Income on BYDFi

BYDFi lets you earn passive income on your COMP holdings and grow your crypto portfolio conveniently. Head to the BYDFi Crypto Lending section to lend liquidity in COMP to our platform. Earn attractive daily interest over seven days, 14 days, or 28 days, and grow your COMP holdings risk-free and safe.

Compound is a decentralized lending and borrowing platform that allows you to earn interest by supplying supported crypto assets. You can earn money by supplying liquidity to the pools of supported cryptocurrencies.

As of January 2023, you can lend/supply AAVE, COMP, DAI, ETH, LINK, SUSHI, TUSD, UNI, USDC, USDP, USDT, and WBTC on the Compound platform. Review the APYs offered and choose the cryptocurrency that provides the best returns.

Make sure you have enough funds in your wallet to cover the transaction and associated gas fees, then enable the Supply function. Sit back and earn interest based on the APYs to generate income using Compound's DeFi services.